Coupland Cardiff Asset Management LLP
The objective of this policy is to ensure that Coupland Cardiff Asset Management LLP (“CCAM” or, where appropriate, the “Partnership”) appropriately manages any conflicts of interest that may arise in connection with its business.
This policy sets out of the steps which CCAM must take to ensure that any conflicts of interest are identified, recorded and managed properly and in accordance with the firm’s obligations under SYSC 10.1 of the Financial Conduct Authority (“FCA”) Handbook, Article 14 of the Alternative Investment Fund Managers Directive (“AIFMD”) and Articles 30-37 of AIFMD Level 2 regulation.
Treating Customers Fairly is central to the core values of CCAM. There is an embedded culture that understands what constitutes acceptable and unacceptable behaviour. As such, conflicts of interest and the identification / management / mitigation thereof are central to this philosophy and culture.
CCAM is a limited liability partnership which is authorised and regulated by the FCA as a UK Full Scope Alternative Investment Fund Manager (“AIFM”) to conduct the regulated activity of Managing an Alternative Investment Fund (“AIF”). CCAM acts as the AIFM to an AIF as well as managing an UCITS and other segregated accounts.
As AIFM the firm provides all or some of the following services to its clients:
Investment Management Functions
- risk management; and
- portfolio management.
- legal and fund management services;
- customer inquiries;
- regulatory compliance monitoring;
- record keeping;
- marketing; and
- activities related to the management of the assets of its clients.
Other Functions for which independent service providers have been appointed
(Aministrator, Prime Broker)
- valuation and pricing (including tax returns);
- maintenance of unit / share holder register;
- distribution of income;
- unit issues and redemptions and issuance of corresponding contract notes;
- settlement of trades; and
- custody of assets.
Services which are entirely the responsibility of the AIFM could potentially give rise to conflicts of interest entailing a material risk of damage to the interests of its clients or their underlying investors. This document aims to set out these potential conflicts and the procedures that are in place to be followed and measures to be adopted in order to manage such conflicts.
3. FCA Rules
The FCA sets out obligations in SYSC 10 (Conflicts of Interest), COBS 11 (Personal Account Dealing), COBS 12 and Principle 8 to which this document is prepared.
Whilst the FCA rules are important to be adhered to by all of CCAM’s staff, they are nonexhaustive, and certain other additional rules may apply to readers who are members of professional associations, or by virtue of their job role. Failure to follow any of the rules
whether by express breach, or failure to follow any of the spirit of identifying, mitigating and managing conflicts of interest may also be a breach of an employment contract. Disciplinary action may be taken by CCAM, or in serious cases by the FCA, or the Department for Business, Energy and Industrial Strategy.
4. Applicable Companies
This policy is applicable to CCAM. It will also take into account any circumstances of which CCAM is or should be aware which may give rise to a conflict of interest resulting from the structure and business activities of other members of the group. To that end this policy will be applicable to CCAM and its parent/associate/group companies. The policy will be appropriate to the size, nature and complexity of the organisation and its business.
5. Ownership and Monitoring
The Compliance Officer is the owner of this document and is responsible for its content and its implementation.
All employees are required to report any actual or potential conflict of interest to the Compliance Officer. Tanya Farrell in her position as Compliance Officer will keep and regularly update a record of the types of activities undertaken by or on behalf of the AIFM in which a conflict of interest entailing a material risk of damage to the interests of one or more clients or its investors has arisen or, in the case of an ongoing activity, may arise. The procedures established are designed to ensure the relevant persons engaged in potential risk of conflict carry out the activities having a degree of independence appropriate to the AIFM.
The Compliance Officer shall carry out a check of any conflicts annually and shall update the Conflicts of Interest Register accordingly.
The Partnership will receive on a frequent basis, and at least annually, written reports on activities referred to above.
The Conflicts of Interest Map and Conflicts of Interest P o l i c y shall be reviewed annually by the Partnership.
6. Identifying Conflicts of Interest
- CCAM must take all reasonable steps to identify conflicts of interest that arise in the course of
Managing an AIF between:
- CCAM, including its managers, employees or any person directly or indirectly linked to it by control, and the clients managed by CCAM or the investors in those clients;
- the clients managed by CCAM or the investors in those clients, and another client or the investors in that client;
CCAM must take all reasonable steps to identify conflicts of interest that arise, in the course of Managing an AIF. For the purpose of identifying the types of conflicts of interest that arise in the course of managing an AIF, CCAM shall take into account in particular whether it, itsmanagers, employees, other relevant person or a person directly or indirectly linked by way of control:
- is likely to make a financial gain, or avoid a financial loss, at the expense of the client or its investors;
- has an interest in the outcome of a service or an activity provided to a client or its investors or to a client or of a transaction carried out on behalf of a client, which is distinct from the client’s interest in that outcome;
- has a financial or other incentive to favour:
- the interest of a UCITS, a client or group of clients or another AIF over the interest of the AIF;
- the interest of one investor over the interest of another investor or group of investors in the same AIF;
- carries out the same activities for the client and for another AIF, a UCITS or client; or
- receives or will receive from a person other than the client or its investors an inducement in relation to collective portfolio management activities provided to the client, in the form of monies, goods or services other than the standard commission
or fee for that service.
With the above factors in mind CCAM has set out potential conflicts that might arise and how to mitigate them and these are set out in the Conflicts of Interest Map.
Similar considerations apply when identifying and mitigating conflicts of interest which may apply in respect of CCAM’s non-AIFMD business.
7. Record Keeping
CCAM must keep and regularly update a record of the kinds of service or activity carried out by or on behalf of the firm in which a conflict of interest entailing a material risk of damage to the interests of one or more clients has arisen or, in the case of an on-going service or activity, may arise.
8. Procedures and Measures Preventing or Managing Conflicts of Interest
CCAM must take all reasonable steps to avoid conflicts of interest and, when they cannot be avoided, manage, monitor and (where applicable) disclose those conflicts of interest in order to prevent them from adversely affecting the interests of the clients and their investors, and to ensure that the clients it manages are fairly treated.
- maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps designed to identify, prevent, manage and monitor conflicts of interest in order to prevent them from adversely affecting the interests of the clients and their investors;
- segregate, within its own operating environment, tasks and responsibilities which may be regarded as incompatible with each other or which may potentially generate systematic conflicts of interest. CCAM has assessed whether its operating conditions may involve any other material conflicts of interest and disclosed them to the investors of the clients;
- assess whether its operating conditions may involve any other material conflicts and disclose them to the client’s investors.
In addition CCAM has identified situations in which activities carried out by it could constitute conflicts of interest that do or do not lead to potential risks of damage to the client’s interests or the interests of its investors. In identifying these CCAM has taken into account not only the activity of collective portfolio management but also other activities it is authorised to carry out, including activities of its delegates, sub-delegates, external valuer or counterparty.
Where the organisational or administrative arrangements made by the AIFM are not sufficient to ensure, with reasonable confidence, that the risks of damage to the interests of the AIF or investors in the client are prevented, the Partners shall be promptly informed in order to take any necessary decision or action to ensure that it acts in the best interests of the client or the investors in that client.
CCAM’s Conflicts of Interest Map identifies (by reference to the specific services and activities carried out by the firm) the circumstances which constitute or may give rise to a conflict of interest entailing a material risk of damage to the interests of the client and the investors.
The Map specifies procedures to be followed and measures to be adopted in order to manage such conflicts and is designed to ensure that:
- the relevant persons engaged in different business activities involving a risk of conflict of interest carry out these activities having a degree of independence which is appropriate to the size and activities of CCAM as the AIFM and of the group to which it belongs, and to the materiality of the risk of damage to the interests of the client or its investors;
- where necessary and appropriate for CCAM to ensure the requisite degree of independence, the procedures to be followed and measures to be adopted in order to prevent, manage and monitor such conflicts shall include the following:
- effective procedures to prevent or control the exchange of information between relevant persons engaged in collective portfolio management activities or other activities pursuant to Article 6(2) and (4) of AIFMD involving a risk of conflict of interest where the exchange of information may harm the interest of one or more clients or their investors;
- the separate supervision of relevant persons, whose principal functions involve carrying out collective portfolio management activities on behalf of, or providing services to, clients or investors, whose interests may conflict, or who otherwise represent different interests that may conflict, including those of the AIFM;
- the removal of any direct link between the remuneration of relevant persons principally engaged in one activity and the remuneration of, or revenues generated by, different relevant persons principally engaged in another activity, where a conflict of interest may arise in relation to those activities;
- measures to prevent or restrain any person from exercising inappropriate influence over the way in which a relevant person carries out collective portfolio management activities;
- measures to prevent or control the simultaneous or sequential involvement of a relevant person in separate collective portfolio
management activities or other activities pursuant to Article 6(2) and (4) of AIFMD where such involvement may impair the proper
management of conflicts of interest.
If the adoption or the application of one or more of those measures and procedures does not ensure the requisite degree of independence, the AIFM shall adopt such alternative or additional measures and procedures as are necessary and appropriate for those purposes.
If the organisational arrangements made by CCAM to identify, prevent, manage and monitor
conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of
damage to investors' interests will be prevented, CCAM must:
- clearly disclose the general nature or sources of conflicts of interest to the investors before undertaking business on their behalf; and
- develop appropriate policies and procedures.
The general nature and/or source of these conflicts will be disclosed to clients in sufficient detail before undertaking business to enable the client to make an informed decision about the service in the context in which the conflict has arisen. For each potential situation, CCAM has analysed whether or not the risk is actual or potential for one or more of its clients.
The information to be disclosed to investors shall be provided to investors in a durable medium or by means of a website. Where information is provided by means of a website and is not addressed personally to the investor, CCAM will ensure the following conditions are satisfied:
- the investor has been notified of the address of the website, and the place on the website where the information may be accessed, and has consented to the provision of the information by such means;
- the information must be up to date;
- the information must be accessible continuously by means of that website for such period of time as the investor may reasonably need to inspect it.