MIFIDPRU Disclosure

Introduction

The Investment Firms Prudential Regime (‘IFPR’) is the UK Financial Conduct Authority’s (‘FCA’) prudential regime for MiFID investment firms which aims to streamline and simplify the prudential reporting and disclosure requirements for MiFID investment firms.

IFPR came into force on 1-Jan-22 and replaced, for investment managers, the previous framework of the Capital Requirements Directive (CRD) IV and Capital Requirements Regulation (CRR). The IFPR is designed to streamline prudential standards for investment firms while strengthening governance, risk management, and capital adequacy requirements.

IFPR requires firms to establish, implement and maintain sound governance and risk management arrangements and conduct the Internal Capital Adequacy and Risk Assessment (‘ICARA’) process on a regular basis, as enacted via MIFIPRU in the FCA Handbook.

The ICARA requires firms to identify, monitor and manage potential harms arising from their business, maintain adequate financial and non-financial resources, and ensure that they could be wound down in an orderly manner if necessary.

Argonaut Capital Partners LLP (“Argonaut”) is classified as a small and non-interconnected (SNI) investment firm for the purposes of IFPR. As such, Argonaut is subject to the requirements applicable to SNI firms, including the obligation to publish this disclosure in accordance with MIFIDPRU 8.

Argonaut’s core business is the provision of discretionary investment management and distribution services for a range of UK-authorised Open-Ended Investment Companies (OEICs). The Firm follows a valuation-orientated investment strategy focused on listed equities across global markets, with a core focus on pan-European opportunities.

Governance 

Argonaut is privately owned by the founding partner Barry Norris, associate partner James Kostoris and the corporate partner Norris Capital Limited. As founding partner and Chief Investment Officer (CIO) Barry Norris carries out the senior management functions of SMF1 and SMF27. Eugénie de Clauzade is the Compliance Officer and holds the senior management function of compliance oversight (SMF16). Justin Mashford is the Chief Financial Officer (CFO) and holds the senior management function of MLRO (SMF17). In addition, Alex Chatterton has been certified under the FCA’s Certification Regime with responsibility for client dealing activities and works alongside Barry Norris as an Investment Analyst, providing input into investment research.

Argonaut has an established risk management and governance structure to ensure that it has effective systems and controls in place to identify, monitor and manage risks arising in the business. The risk management process is overseen by Chief Operating Officer (COO) Rory Sheward with Argonaut’s management team, led by CIO Barry Norris, holding overall responsibility for the risk appetite of the firm. Argonaut’s management team is responsible for determining the strategic direction, senior-level hires, material issues and risk appetite of the firm. This includes control of areas such as financial projections, business performance, strategic initiatives, recruiting, remuneration, compliance and regulation, and risk management and the control environment.

The Management team meets on a regular basis to discuss current projections for profitability, cash flow, regulatory capital, management, business planning, and risk management. The firm also retains a library of policies and procedures with regard to the relevant laws, standards, principles, and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.

Argonaut’s governance framework is further supported by internal committees that provide structured oversight and challenge. The Investment Committee, comprising Barry Norris (CIO), James Kostoris (Partner), and Alex Chatterton (Investment Analyst), meets on a weekly basis to review investment research, portfolio positioning and risk exposures, ensuring that investment decisions are subject to collective discussion. The Risk and Compliance Committee, comprising Eugénie de Clauzade (SMF16 – Compliance Oversight), Justin Mashford (CFO and SMF17 – MLRO), James Kostoris (Partner), Rory Sheward (COO), and Andrew King (Head of Client Services), monitors the Firm’s regulatory obligations, risk management framework and control environment, and provides independent challenge to the governing body on prudential and conduct risks.

Risk management objectives and policies

Argonaut has implemented and embedded risk management processes and policies across all relevant risk areas of its business. Argonaut’s management team set the business strategy and risk appetite, which flows through to its risk management framework. Argonaut will also seek to identify and further assesses key risks via its Internal Capital and Risk Assessment (“ICARA”) process.

Argonaut is an SNI Firm. It acts solely as an agent and is a single legal entity. It does not, therefore, fall into consolidated recording.

Overall, Argonaut seeks to mitigate risk by implementing sound systems and controls and a robust corporate governance arrangement, as described above.

Below are outlined Argonaut’s risk policies on certain key areas:

Own funds requirements (MIFIDPRU 4)

• 4.4 – as an SNI firm without permissions for holding client money or client assets in the course of MIFID business, Argonaut is subject to a Permanent Minimum Requirement of £75,000.
• 4.5 – Argonaut calculates its own funds requirements based on the Fixed Overhead Requirement (“FOR”) calculation. This is one quarter of the relevant expenditure from the previous full financial year.
• The Firm has further assessed any risks facing its business operations within its ICARA and quantified additional own funds and liquidity, where required.

Concentration risk (MIFIDPRU):

• Argonaut does not conduct any trading on own account and does not have regulatory permissions for dealing as principal. The Firm therefore does not have any concentration risks on or off-balance sheet and does not operate a trading book.

Basic liquid assets requirement (MIFIDPRU 6)

• Argonaut maintains minimum liquidity at all times, in compliance with the Basic Liquid Asset Requirement (BLAR), being at least 1/3 of its FOR.
• Argonaut does not provide any client guarantees and therefore its entire liquidity requirement is driven by its expenses, as captured by the FOR.
• As part of the ICARA, Argonaut maintains liquidity to satisfy its net wind-down costs and any additional liquidity requirements which the ICARA identified for supporting the ongoing business activities of the Firm.

Own funds requirements

Argonaut calculates its own funds requirements as an SNI firm in line with the rules and requirements in MIFIDPRU 4.3 for SNI firms (data shown in £000’s).

Total Expenses     £1,989
FOR                         £497

Remuneration policies & practices

In accordance with MIFIDPRU 8.6.2, Argonaut makes the following qualitative remuneration disclosures:

• Argonaut’s remuneration policies and practices are reviewed annually to ensure they are appropriate and proportionate to the nature, scale and complexity of the risks inherent in the business model and the activities of the firm.
• The management team, as the Remuneration Committee, is directly responsible for the overall remuneration policy.
• Argonaut ensures that its remuneration structure promotes effective risk management and balances the fixed and variable remuneration components for all Staff.
• Variable remuneration is adjusted in line with capital and liquidity requirements as well as the firm’s performance.

At the heart of Argonaut’s Remuneration Policy is the need to ensure that the structure of an employee’s remuneration is consistent with, and promotes, sound and effective behaviour and that it does not encourage excessive risk-taking or behaviour inconsistent with the values and objectives of the business.

Performance assessment will not relate solely to financial criteria but will also include compliance with regulatory obligations, internal policies and general contribution to the business. For example, attendance of compliance training and the correct and timely submission of Personal Account (PA) dealing requests are monitored and reviewed for all employees. Considerations such as these will factor in an employee’s annual appraisal and ultimately their remuneration.

The firm does not award guaranteed bonuses. The management group set aside a proportion of the firm’s profits to form a bonus pool out of which variable remuneration awards will be made. The size of the bonus pool will be at the discretion of Argonaut’s directors, and duly recorded, giving due consideration to both the need to incentivise personnel and to the current and future stability and profitability of the firm.

Argonaut seeks an appropriate and balanced ratio between fixed and variable components of staff remuneration. At its core, the firm believes in merit-based remuneration where strong performance is rewarded. However, it also seeks to guard against excessive risk-taking and thus overall, staff are paid sufficiently high levels of fixed remuneration relative to variable remuneration to enable the operation of a fully flexible policy on variable components, including the possibility of paying no variable remuneration at all in any single year.

Where remuneration is performance-related, then in addition to the performance of the individual Argonaut will also take into account the overall results of the firm.

Remuneration quantitative disclosures

Audited accounts FYE 31 December 2023