Capital Requirements Directive

Accendo Market’s remuneration policy considers in full the requirements of and our obligations to the FCA’s revised Remuneration Code and the Capital Requirements Directive (Directives 2006/48/EC and 2006/49/EC) as amended by CRD III. The application of proportionality is reviewed annually by the board of directors of Accendo Markets, to determine its scope and continued application.

Objective

Accendo Market’s compensation program is designed to attract, develop, retain and reward employees for contributing to Accendo Market’s success, whilst maintaining financial stability including a sound capital base for the underlying entity and robust and effective risk management.

Basic Salary

Basic salary compensation is generally based upon individual expertise, internal and external parity and the level of responsibility the position has on supporting the success of Accendo Markets. The length of service with Accendo Markets is not considered when determining basic salary levels.

Variable Compensation

In addition to an employee’s basic salary compensation, employees may be eligible to participate in Accendo Market’s variable compensation program. Variable compensation is a bonus paid in excess of basic salary and benefits to incentivise employee performance. The payment and amount of any variable compensation under the program is at the complete discretion of the board of directors, and Accendo Markets is under no obligation to pay an employee any variable compensation. An employee must be actively employed by Accendo Markets on the date that variable compensation is paid in order to be eligible to receive variable compensation. Variable compensation may be based on individual performance relative to expectations and objectives, business unit performance, overall Accendo Markets financial results and other factors. Variable compensation, if paid, will be paid in cash and/or equity units as applicable, and in accordance with Accendo Market’s programmes and policies in effect, from time to time. The total variable remuneration must not limit the firm’s ability to strengthen its capital base.

Alignment of Remuneration with effective Risk Management.

Risk Appetite and Tolerance

Accendo Market’s risk appetite is agreed annually by Accendo Market’s board of directors and documented in the risk policy documents, which is available to all employees. Operating within the scope of Accendo Market’s risk appetite is an absolute pre-requisite to the awarding of any variable, incentive or performance related compensation.

Non-compliance or actions contrary to the stated risk appetite will not be rewarded.

Operating within the stated risk appetite is realized in practice through the firm’s risk assessments and Internal Capital Adequacy Assessment Process (“ICAAP”). The ICAAP is approved annually by Accendo Market’s board of directors.

Included in the risk assessments and ICAAP, and considered in the awarding of variable compensation are:

• Key risk indicators (“KRIs”) and tolerances set by management and assigned to business units and ‘Identified Staff’. KRIs are defined and measured annually in employee annual appraisals
• Clear compliance objectives for every employee
• Compliance by all employees to the practices set out by the firm

Supporting the Business Strategy

The remuneration policy aligns to the goals of Accendo Markets

Conflict of Interest

• The risk and compliance functions’ variable compensation is not correlated to business performance. Instead the functions’ variable compensation is determined by the performance of the individual and the function against objectives set for each, where applicable.

Remuneration and Capital / Profit based measured risk

Implementation

• Employee performance is measured against individual employee predefined objectives and KRIs. Accendo Markets may take into account the specific features of their activities. Both non-financial and financial performance will be taken into account.
• Accendo Market’s board of directors independently reviews the remuneration policy on an annual basis to ensure:
  • The policy operates as intended, that remuneration payouts are appropriate, and that the risk profile, long term objectives and goals of Accendo Markets are adequately reflected.
  • The policy remains in line with the Financial Conduct Authority’s requirements, principals and standards including the continued application of proportionality under CRD III.

Remuneration Code Principles

Accendo Markets is aware of the FCA revised Remuneration Code’s twelve principles and will act in compliance with them.

The Remuneration Code in SYSC 19C will apply to Accendo subject to the FCA’s proportionality guidance. Some of the requirements in the Remuneration Code apply on a firm-wide basis whilst others only apply to certain categories of individuals, known as “Code Staff” (e.g. senior management, risk takers, approved persons and employees whose remuneration takes them into the same remuneration bracket as senior management and risk takers and whose activities have a material impact on the firm’s risk profile).

Some of the more prescriptive requirements in the Remuneration Code may be relaxed for Code Staff that fall within the de minimis exemption provided that the individual staff’s treatment remains consistent with the general principle of ensuring remuneration policies promote effective risk management. The de minimis exemption applies where both of the following conditions are satisfied in relation to Code Staff: (i) total remuneration for that performance year is not more than £500,000; and (ii) variable pay for that performance year is not more than 33% of his or her total remuneration.

Where the de minimum exception is dis-applied then the following prescriptive rules can be dis-applied in relation to that Code Staff member:

1. the restriction on guaranteed bonuses;
2. at least 50% of variable pay is in the form of shares or equivalent ownership instruments in the Firm;
3. at least 40% of variable pay is deferred for a period of not less than 3-5 years. If variable pay is high then at least 60% should be deferred; and
4. it should be possible to claw-back and adjust variable pay based on performance.

In addition, it is reasonable under the circumstances to dis-apply the remuneration requirements in bullets (2), (3) and (4) above and the rule on the ratio between fixed and variable remuneration (e.g. the requirement that there should be an appropriate balance between fixed and variable remuneration and that fixed remuneration should represent a sufficiently high proportion or overall remuneration) (the “firm exemption”). This is due to the fact that we provide execution-only services and the vast majority of our clients’ trades take place on-line, so the risk of conflicts of interest are reduced. That said, residual risks remain and must continue to be managed (i.e. the use of robust compliance monitoring and financial disincentives).

Notification

Accendo Markets will notify the FCA if it becomes aware of changes regarding threshold conditions, its reputation and capability to provide good service to customers.