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76 Baggot Street Lower,
Pillar 3 Disclosure Statement – Position as at 31.03.2021
The European Union (EU) Capital Requirements Directive (CRD) introduced a revised capital adequacy framework across financial markets in Europe in order to reduce the risk to consumers of financial loss and to minimise the effects of market disruption. The CRD applies to all investment firms authorised under the Investment Intermediaries Act, 1995 and the European Union (Markets in Financial Instruments) Regulations 2017. CRD is designed to ensure that investment Firms have sufficient financial resources in relation to their risk profile and the controls that we have in place.
The Central Bank of Ireland is responsible for the implementation and supervision of CRD in Ireland.
the CRD required regulated firms to make significant changes to the way they calculate their capital requirements including the application of the concepts of three pillars under the CRD Framework:
Central Bank of Ireland, whether any additional capital should be maintained against risks not covered under Pillar 1. The process by which this is achieved is the Internal Capital Adequacy Assessment Process (“ICAAP”), which includes an assessment of each of the risks faced by the firm and the internal controls in place to manage or mitigate those risks.
Elkstone is subject to the requirements of the European Union (EU) Capital Requirements Directive IV (hereafter ‘CRD IV’) and Capital Requirements Regulation (hereafter ‘CRR’). CRD IV and CRR repeal Directives 2006/48/EC and 2006/49/EC.
Pillar 1 capital requirements are the greater of:
Internal Capital Requirement
The Firm’s minimum capital requirements are calculated CRR and CRD IV and the Firm is satisfied its initial capital requirement is €75,000.The Firm will not be providing Investment Services 3 (Dealing on own account) or 6 (Underwriting of financial instruments or placing on a firm commitment basis as listed in Schedule I of the European Union (Markets in Financial Instruments) Regulations 2017. As a result, Article 95(1), of the CRR applies and consequently Article 97 is available. It requires investment firms to provide own funds which are always more than or equal to the higher of the capital requirements calculated in accordance with the requirements contained in Article 92 of the CRR and the amount set out in Article 97 of the CRR which states that an investment firm shall hold eligible capital of at least one quarter of the fixed overheads of the previous year.
The internal capital requirement is the higher of Pillar 1 and Pillar 2 capital requirement. See ‘Capital Assessment’ section below for the calculation of Elkstone Private’s internal capital requirement.
Elkstone Private Advisors Ltd. (‘the Firm’ or ‘Elkstone Private’) is an Irish-incorporated company and was incorporated on the 28th of May 2013. It is a 100% owned subsidiary of Elkstone Capital Partners Ltd (‘Elstone Partners’). The Firm was authorised by the Central Bank of Ireland on 14th June 2014 under the European Communities (Markets in Financial Instruments) Regulations 2007 to carry out the following regulated investment services:
Advice and services relating to mergers and the purchase of undertakings.
Relating to transactions in financial instruments.
The Firm’s business vision is to operate as a client focused multi-family office primarily for high net worth individuals. The Firm’s vision is to be positioned both locally and globally as a recognised multi-family internationally focussed office, which can serve an increasing number of clients.
The Firm offers a range of services including non-regulated consulting and accounting services in addition to regulated investment services outlined above and these services extend to institutional clients.
The following Pillar 3 disclosures have been prepared as at 31st March 2021, which is the accounting period end date for the Firm.
RISK MANAGEMENT FRAMEWORK
The Board of Elkstone Private has established a comprehensive framework for the management of risk and has overall responsibility for risk management systems and related controls and for reviewing their ongoing effectiveness. The Board has delegated certain of its responsibility to the Operational Risk Committee and management in the first instance. The Board monitors the Company’s various risk exposures and also reviews financial performance, oversees regulatory compliance and monitors key performance indicators.
The primary objective of the Risk Management Framework is the protection, preservation and integrity of client assets both in custody and advisory terms. A secondary objective is the protection, preservation and integrity of Elstone Private. Having a Risk Management Framework facilitates the Firm in identifying, measuring, analysing, monitoring and reporting on the Firm’s key risks.
Risk Governance and Responsibilities
The Board of Directors has ultimate responsibility for ensuring the Firm has appropriate structures, processes, policies and procedures in place in respect of Risk Management. The Board has delegated more detailed oversight of risk to Operational Risk Committee and to the Head of Compliance & Risk and to the rest of the Senior Management team.
Elkstone Private employs the three lines of defence model whereby business units are responsible for identifying risks in their areas and complying with the controls and procedures in their business area. The Head of Compliance & Risk carries out monitoring and provides advice.
A core element of the Firm’s internal control process is the Firm’s company policies and procedures for the operations of the Firm. Key internal control policies include Business Continuity Plan (BCP), the Remuneration Policy and the Compliance Plan.
The risk management process of identifying, analysing and treating risks is documented in the Firm’s Risk Register. The Head of Compliance and Risk is responsible for updating the Risk Register with input from the business units.
Business Error Process
The Firm has a business error process whereby incident report forms are required to be completed and sent to the Head of Compliance & Risk when a business error occurs. All reported incidents are investigated by the Head of Compliance & Risk, in consultation with management, and where appropriate, a report is prepared that is finalised following discussion. Corrective actions, lessons learned and any procedural changes are identified. The Head of Compliance & Risk enters the details on the Business Error log and provides a summary of the incident to Senior Management, the Risk Committee and the Board.
Risk Appetite Statement
Risk appetite defines the amount and nature of risk the Firm is prepared to accept in pursuit of its business objectives. Risk appetite guides the Firm in its risk taking and related business activities, having regard to the maintenance of financial stability and solvency.
Key Risk Indicators
The Firm has defined Key Risk Indicators to track its profile against the most significant risks that it assumes. The Key Risk Indicators have defined ranges which would rate a risk green, amber or red. The status of the Key Risk Indicators are reported to the Risk Committee and any risks rated red are discussed in detail at the Risk Committee.
The final element of the Risk Management Process is composing the ICAAP document.
The principal areas of risk identified as Part of the Pillar 2 Capital Assessment are outlined below:
To calculate the Pillar 2 requirement, scenarios were run for the key risks and capital set aside based on the potential financial impact and the likelihood. The minimum Pillar 2 capital requirement was calculated as €400,000.
The Pillar 1 Capital requirement was calculated €322,000.
The internal capital requirement is the higher of the Pillar 1 and Pillar 2 capital requirement and was therefore €400,000
The most recent audited accounts for the Firm show the capital and reserves of Elkstone Private to be €501,000 which is in excess of the Firm’s regulatory capital requirement. All capital is categorised as Tier 1 capital.
Head of Compliance & Risk
Markets in Financial Instruments Directive 2014/65/EU (“MiFID II”) as implemented in Ireland by the European Union (Markets in Financial Instruments) Regulations 2017 requires that Elkstone Private Advisors Ltd (‘the Firm’ or ‘Elkstone’) have in place an Order Execution Policy with clients, such that if:
that Elkstone takes all reasonable steps to obtain the best possible result (‘best execution’) on a consistent basis for you. This document sets out how Elkstone will aim to achieve best execution for you as defined in MiFID II.
Elkstone Private is committed to providing the highest level of service and offering a highly personalised and responsive service to all our clients. We value our clients’ feedback, which is why we want all our clients to let us know if they are unhappy with our service or product provided.
We aim to resolve all complaints quickly and effectively. Elkstone Private manages complaints arising in respect of its regulatory products and services in accordance with applicable regulatory requirements and the Central Bank’s Consumer Protection Code. This policy sets forth the manner in which Elkstone Private responds to your complaint.
The Central Bank’s Consumer Protection Code defines a complaint as “an expression of grievance or dissatisfaction by a consumer, either orally or in writing, in connection with:
All complaints will be handled in accordance with the Central Bank’s regulatory requirements, as set out in the Consumer Protection Code, and Elkstone Private’s Complaints Policy.
We want you to be able to complain in a way that you prefer. If you are dissatisfied with our service you may let us know by phone, email, post or in person. All complaints should be made and addressed in the first instance to the Head of Compliance & Risk.
Elkstone Private Advisors Ltd,
76 Baggot Street Lower,
Dublin 2, D02 EK81
Tel: +353 1 662 5021
If it is possible, we will try to resolve your complaint within 5 business days of receipt of your complaint. Due to the complex nature of some complaints this may not always be possible and therefore an extended time period may be required in order to satisfactorily resolve your complaint. Should this be the case, we will aim to acknowledge your complaint in writing within five business days.
We will investigate your complaint in a prompt manner and will provide you with a full response at the earliest opportunity. If your complaint is not resolved within 20 working days, starting from when the complaint was made, we will send you progress letters every 20 working days until we deem the complaint resolved. We will aim to resolve the complaint within 40 business days of having received your complaint and if not resolved within this timeframe, we will inform you of the anticipated timeframe within which we hope to resolve the complaint.
If the complaint is not resolved within 40 working days or if you are not satisfied with the outcome of your complaint, you may refer your complaint to the Financial Services and Pensions Ombudsman (‘FSPO’).
We try to resolve all complaints to our clients’ satisfaction. Upon completion of our investigation we will notify you in writing within five business days of completing our investigation, confirming the outcome of the investigation, where applicable, the terms of any offer or settlement being made, advising you that you can refer the matter to the FSPO and include the contact details of the FSPO.
However, if you are unhappy after receiving our conclusions, you can convey your concerns to your contact in Elkstone Private dealing with your complaint, who will in turn issue you with a Final Response Letter so that you may refer your complaint to the FSPO.
Financial Services and Pensions Ombudsman,
Lo-call Number: 1890 88 20 90
It is Elkstone Private’s policy to observe and maintain high standards of integrity and fair dealing, to observe high standards of market conduct, and to act with due skill, care and diligence in conducting its affairs and those of its clients.
We are committed to identifying, with reference to the specific investment services and activities and ancillary services carried out by or on behalf of Elkstone Private, the circumstances which constitute or may give rise to a conflict of interest entailing a risk of damage to the interests of its clients. Equally, in response, Elkstone Private will take all reasonable steps designed to prevent or manage such conflicts from adversely affecting the interests of its clients. Conflicts of interest may arise between:
Elkstone Private has an obligation to establish, implement and maintain an effective conflicts of interest policy. The purpose of this document is to provide a summary of Elkstone’s Conflicts of Interest Policy. In many cases, Elkstone will operate additional procedures that will be described in other policy documents, in order to implement the Conflicts of Interest Policy at a detailed level.
Conflicts of interest may arise in relation to providing investment services where the Firm, its, directors, employees, affiliates, or any person directly or indirectly linked to the Firm:
It is the responsibility of all employees in Elkstone Private to be aware of the potential for conflicts of interest to arise within Elkstone Private’s operations. Employees receive training to create awareness of conflicts that may arise and to manage conflicts appropriately. Where an employee believes they may have identified a conflict, they are required to report details to the Head of Compliance and Risk. To avoid any impropriety, whether real or perceived, Elkstone Private has put in place controls:
Elkstone Private has considered the circumstances which constitute or may give rise to a conflict of interest entailing a risk of damage to the interests of its clients. In response, the Firm has adopted procedures and measures in order to prevent or manage such conflicts from adversely affecting the interests of its clients. The following includes some of the key procedures adopted to manage potential conflicts of interest, in our business:
Elkstone Private will take all reasonable steps to prevent conflicts from adversely affecting the interests of clients and will only revert to disclosure as a measure of last resort. Where organisational or administrative arrangements made by Elkstone Private to prevent conflicts of interest from adversely affecting the interests of its clients are not sufficient to ensure, with reasonable confidence, that the risk of damage to its clients’ interests will be prevented, Elkstone Private clearly discloses to the relevant client the general nature and/or sources of conflicts of interest, as well as the risks to the client that may arise as a result of the conflicts of interest and the steps taken to mitigate the risks before undertaking business on their behalf. Such disclosure is made in a durable form, is fair, clear and not misleading.
The Conflict of Interest Policy is reviewed annually by Elkstone Private Board.
At Elkstone we believe a responsible approach to environmental, social and governance (ESG) issues is a core value for our stakeholders, in particular for our Team and our clients.
As a company, we consider ESG investment critical to allow us to construct portfolios that satisfy our clients’ principles as well as their financial needs. Elkstone is committed to consider and factor in sustainability risk into our advisory and portfolio management investment services while meeting our client’s needs. We consider the impact on health, safety, society and the environment in our investment selection. The Firm’s ethos on wealth preservation and clients’ desires to generate sustainable long-term returns requires the investment process to have regard to and manage where possible adverse impacts on sustainability factors which may impact client portfolios or advise we provide. It is our view that over time, this ESG strategy can generate long-term competitive financial returns as well as having a positive impact on society.
We don’t see investing responsibly as an obligation, we see it as an opportunity. That’s because the sustained success of any company depends on the health of the economic and environmental systems around it.
It is the Firm’s policy to maintain remuneration arrangements that, among other things, do not encourage risk-taking (including in respect of exposure to Sustainability Risk as defined in the SFDR) that is inconsistent with its risk profile.