Remuneration Disclosure
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Square Capital LLP
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MIFIDPRU 8 DISCLOSURE
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Financial Year Ended 30.11.2023
1. INTRODUCTION
1.1. Background
Square Capital LLP (“the Firm”) is prudentially regulated as an SNI MIFIDPRU Investment Firm and acts as an Investment Manager. It is permitted to act only for eligible counterparty and professional customer types. The Firm is authorised and regulated under UK legislation by the Financial Conduct Authority (“FCA”).
1.2 Scope of Application
Due to its ownership structure, the Firm is not a member of an investment Firm group and therefore is required to issue disclosures on an individual basis for prudential purposes.
1.3 Disclosure Policy
This Disclosure is in line with the most recent published financial statements for the Firm as at 30.11.2023.
The MIFIDPRU Disclosure obligations, under MIFIDPRU chapter 8, require publication on an annual basis. The FCA expects this to be published on the Firm’s website. This Disclosure will be assessed and amended if there are any material changes within the period of Disclosure.
This Disclosure has been approved by the governing body of the Firm and is not subject to audit, except where it is prepared under accounting requirements for publication.
2. REMUNERATION
2.1 Approach to Remuneration
The Firm does not link remuneration directly to the performance of the Firm, or that of the Group, rather, the Firm’s performance may be a factor in determining variable remuneration. The Firm also considers its non-financial criteria when assessing remuneration.
When determining the variable remuneration paid to any employee, the Firm considers a number of factors covering the Firm as a whole. Individuals are rewarded based on their contribution to the overall strategy of the business. Investment generation, investment trading, sales & marketing, operations and other factors such as: the individual’s success in carrying out their role with excellence and quality, participation in firmwide level support, showing initiative and executing their role with accuracy in mind, adherence to the Firm’s compliance requirements, conduct and adherence to the Firm’s values are taken into account. The factors to be used in setting bonuses are at the absolute discretion of the Firm depending on the Firm’s and individuals’ performances.
Given the relatively small size of the Firm, the remuneration policy for all remuneration code staff is set by the board. The board review remuneration for code staff based upon individual, both financial and non-financial criteria, and overall firm performance. Individual performance is also reviewed over an extended period to ensure the long-term objectives of the staff and the Firm are not in conflict. The overall level of remuneration is set in the form of a base salary and a bonus. The resources available for bonuses are directly linked to the performance of the Firm.
Any discretionary bonus scheme pools are calculated by reference to the Firm’s net operating profit, where the underlying revenue is not subject to recovery or downward adjustment. Employees are not encouraged, and the Firm’s remuneration schemes do not reward, the taking of market or trading risks.
The discretion held by the Board of the Firm ensures that the Firm is able to retain employees in executive positions who are vital to the Firm’s strategic development. The Firm has no obligation to pay variable remuneration other than out of realised profits which are not subject to later reduction (after subtracting all expenses relating to running the business) to allow for a fully flexible policy. Accordingly, the Firm’s total variable remuneration does not limit its ability to strengthen and maintain its capital base.
In the case of early termination of a contract, any payments will reflect performance achieved over time, the Firm does not reward failure.
The Firm does not award guaranteed variable remuneration. In exceptional circumstances such payments may need to be considered in the context of new remuneration code staff or as retention awards should the Firm ever undergo a major restructuring. In such cases the governing body, in conjunction with the Compliance Officer, will consider and document whether such an award would be in keeping with the MIFIDPRU remuneration code.
2.4 Remuneration Objectives
The Firm’s financial incentives are designed to attract and retain employees with the appropriate skills, knowledge and expertise to enable the Firm to deliver its long-term strategic goals, widen its client base and expand into similar areas of business as and when the appropriate opportunities arise, in each case in a manner which is consistent with and which promotes effective risk management and does not expose the Firm to excessive risk.
2.5 Remuneration Governance
The Firm has in place a Remuneration Policy which is approved by the Board at least annually.
The Firm does not meet the criteria to form a remuneration committee under SYSC 19G. In view of the nature and size of the Firm, the Board does not believe it is proportionate to have a Remuneration Committee but will periodically monitor the remuneration practices of the Firm to determine if the implementation of such a committee would enhance its practices. The Board has oversight of the Firm’s remuneration policies and refers to its remuneration Terms of Reference and the MIFIDPRU remuneration code. Furthermore, the Firm ensures that the Firm’s standards, fairness, compliance objectives, corporate governance and maintaining a sound capital base are not compromised by its remuneration incentives. The Firm has used external consultants to assist in the development of its remuneration policies and practices.
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