Office 3 Prama House
267 Banbury Road
Oxford, OX2 7HT
The Financial Conduct Authority (“FCA” or “regulator”) in the Prudential sourcebook for MiFID Investment Firms in the FCA Handbook (“MIFIDPRU”) sets out the detailed prudential requirements that apply to Xeqos Limited (“Xeqos” or the “Firm”). Chapter 8 of MIFIDPRU (“MIFIDPRU 8”) sets out public disclosure rules and guidance with which the Firm must comply, further to those prudential requirements.
Xeqos is classified under MIFIDPRU as a small and non-interconnected MIFIDPRU investment firm (“SNI MIFIDPRU Investment Firm”). As such, the Firm is required by MIFIDPRU 8 to disclose information regarding its remuneration policy and practices.
The purpose of these disclosures is to give stakeholders and market participants an insight into the Firm’s culture and to assist stakeholders in making more informed decisions about their relationship with the Firm.
This document has been prepared by Xeqos in accordance with the requirements of MIFIDPRU 8 and is verified by the Firm’s Governing Body, its Board of Directors (“Board”). Unless otherwise stated, all figures are as at the Firm’s 31 December financial year-end.
Remuneration Policy and Practices
As an SNI MIFIDPRU Investment Firm, Xeqos is subject to the basic requirements of the MIFIDPRU Remuneration Code (as laid down in Chapter 19G of the Senior management arrangements, Systems and Controls sourcebook in the FCA Handbook (“SYSC”)). Xeqos, as an alternative investment fund manager, is also classified as a collective portfolio management investment firm, and as such, is also subject to the AIFM Remuneration Code (SYSC 19B). The purpose of the remuneration requirements is to:
The objective of Xeqos’s remuneration policies and practices is to establish, implement and maintain a culture that is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile of the Firm and the services that it provides to its clients.
In addition, Xeqos recognises that remuneration is a key component in how the Firm attracts, motivates, and retains quality staff and sustains consistently high levels of performance, productivity, and results. As such, the Firm’s remuneration philosophy is also grounded in the belief that its people are the most important asset and provide its greatest competitive advantage.
Xeqos is committed to excellence, teamwork, ethical behaviour, and the pursuit of exceptional outcomes for its clients. From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort, attitude, and results.
Remuneration at Xeqos is made up of fixed and variable components. The fixed component is set in line with market competitiveness at a level to attract and retain skilled staff. Variable remuneration is paid on a discretionary basis and takes into consideration the Firm’s financial performance as well as the financial performance of each business unit and the financial and non-financial performance of the individual in contributing to the Firm’s success. All staff members are eligible to receive variable remuneration.
The ultimate decision on variable remuneration to be awarded to staff members is made by the Firm considering its current profits and any future capital required to be put aside for expansion plans or for regulatory capital purposes on the basis of forecasts. The outcome of these considerations will then be used to determine a bonus pool to be distributed to staff members. The amount allocated to each individual will be based on their overall contribution to the Firm as a whole, is fully discretionary and the decision rests with the Board. Any bonus pool will always be based on the profit of the Firm and not projected future income. The Board will also consider the Firm’s financial and capital position, taking into account any potential costs/capital strains which may occur over the coming year. The bonus pool is linked to the performance of the Firm as a whole and not individual trading performance. The key financial performance measures used to determine the total variable pay-out is the Firm’s net profit/loss after all expenses have been paid and this will be supplemented by an assessment of other key performance measures and identified risks outlined within the Firm’s Internal Capital Adequacy Risk Assessment (“ICARA”).
Individual staff performance at Xeqos is determined using financial and non-financial criteria on a meritocratic basis which is gender neutral. Performance is based on a range of criteria on which each staff member, taking into account their role, is assessed. The performance of staff members is not based upon contribution to investment performance only; it also includes factors such as their adherence to the Firm’s compliance policies and risk limits. Any violations of these policies will be considered when determining variable remuneration and may have a negative impact on the amount of variable remuneration awarded.
The fixed and variable components of remuneration are appropriately balanced: the fixed component represents a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration. This allows for the possibility of paying no variable remuneration component, which the Firm would do in certain situations, such as where the Firm’s profitability performance is constrained, or where there is a risk that the Firm may not be able to meet its capital or liquidity regulatory requirements.
The Board is responsible for setting and overseeing the implementation of Xeqos’s remuneration policy and practices. In order to fulfil its responsibilities, the Board:
Xeqos’s remuneration policy and practices are reviewed annually by the Board.
For the financial year e.g., 1 January to 31 December 2022, the total amount of remuneration awarded to all staff was £563,898, of which £435,589 comprised the fixed component of remuneration, and £128,308 comprised the variable component. For these purposes, ‘staff’ is defined broadly, and includes, for example, employees of the Firm itself, directors, partners or members, employees of other entities in the group, employees of joint service companies, and secondees.
