Established Japanese investmenthouse with global reach
The Modern Slavery Act 2015 (the “Act”) of the United Kingdom requires certain businesses to provide disclosure concerning their efforts to address the issues of Slavery and Human Trafficking in their supply chain.
This statement sets out the approach taken by Daiwa SB Investments (UK) Ltd (DSBI UK) during the financial year ending 31 December 2018 towards identifying and preventing modern slavery and human trafficking in its business and supply chains, as required by the Act.
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Daiwa SB Investments (UK) Limited (“DSBI” or “the firm”) is a private limited company incorporated in the United Kingdom. DSBI is primarily an investment management business, which is regulated by the UK Financial Conduct Authority (“FCA”). The company also provides investment research and marketing support services to its parent company (Sumitomo Mitsui DS Asset Management Company, Limited (SMDAM)); a company based in Tokyo, Japan.
This statement sets out the firm’s approach to conducting its tax affairs and dealing with tax risks. DSBI regards the publication of this tax strategy as complying with its duty under paragraph 16 (2) Schedule 19 of the Finance Act 2016 to publish their UK tax strategy.
DSBI is committed towards conducting its tax affairs consistently with the following principles:
Approach to risk management and governance:
Ultimate responsibility for the UK tax strategy, the supporting governance framework; and management of tax risks resides with the board of directors. Responsibility for delivering on the firm’s tax strategy and managing the firm’s tax affairs is delegated to the company’s tax function. As part of this role, the tax function provides tax advice to the firm, prepares all UK tax filings, manages relationships with HMRC and undertakes various forms of tax and financial reporting. This is all done under the close supervision of the firm’s senior management.
All new products and material business transactions are subject to review by senior management to ensure that they are consistent with the organisation’s tax principles, and the tax function is consulted over any sensitive or complex technical matters. External tax advice is sought where appropriate to assist with UK tax compliance matters and provide technical support in the context of complex tax matters.
The firm’s senior management and tax function regularly communicate with the tax department of the parent company (SMDAM) to ensure that the UK tax strategy and related policies are fully aligned with the objectives of the wider, worldwide group. As part of a wider multi-national organisation, DSBI is exposed to a variety of tax risks which can be broadly categorised as follows:
Tax Compliance and Reporting Risks - The risk associated with compliance failures, such as the submission of late or inaccurate returns, the failure to submit claims and elections on time, and the failure of finance and operational systems to meet tax compliance and reporting requirements.
Transactional Tax Risks - The risk that transactions are executed or actions taken without appropriate consideration of the tax consequences, or where tax advice is not correctly implemented.
Reputational Risks - The risk that tax planning and governance arrangements fail to prevent tax outcomes that have a negative impact on our relationships with stakeholders; including shareholders, customers, tax authorities and the general public.
The firm’s tax principles and governance arrangements that are set out in this UK Tax Strategy are intended to mitigate each of these risks and are reviewed on a regular basis to ensure they continue to be effective.
We are committed to full compliance with our tax obligations and paying the right amount of tax at the right time. We will not engage in inappropriate tax planning strategies to avoid such tax liabilities. DSBI considers tax planning strategies to be inappropriate if:
The Firm does not provide or promote products to customers which either have or are intended to produce tax results that are contrary to the intentions of law makers or which are likely to result in tax controversy when disclosed to relevant tax authorities.
Tax risk appetite:
The firm has a low appetite towards tax risk. We do not participate in aggressive tax planning or complex structured arrangements designed to reduce our tax liability.
We acknowledge that the subjective nature and complexity of tax legislation makes it impossible to fully mitigate all tax risks. However, we still seek to manage our tax affairs in a manner that maximises long term shareholder value through a compliant, transparent and prudent approach to tax risk management.
Relationship with HMRC:
Consistent with the firm’s tax principles, DSBI seeks to maintain an open and transparent relationship with HMRC. This takes the form of providing timely and accurate responses to all enquiries and, where appropriate, seeking advance clearances or entering into formal agreements in respect of significant tax issues.
The Pillar 3 disclosure of Daiwa SB Investments (UK) Ltd. (“the Firm”) is set out below as required by the FCA’s “Prudential Sourcebook for Banks, Building Societies and Investment Firms” (BIPRU) specifically BIPRU 11.3.3 R. This is a requirement which stems from the UK’s CRDIII Implementing regulations which represented the European Union’s application of the Basel Capital Accord. The Firm is no longer formally subject to CRD but remains subject to the UK’s Implementation Regulations of CRD prior to CRDIV. The regulatory aim of the disclosures is to improve market discipline.
The Firm will be making Pillar 3 disclosures at least annually. The disclosures will be as at the Accounting Reference Date (“ARD”).
Media and Location
The disclosure is published on our website.
The information contained in this document has not been audited by the Firm’s external auditors, as this is not a requirement, and does not constitute any form of financial statement and must not be relied upon in making any judgement on the Firm.
The Firm regards information as material in disclosures if its omission or misstatement could change or influence the assessment or decision of a user relying on that information for the purpose of making economic decisions. If the Firm deems a certain disclosure to be immaterial, it may be omitted from this Statement.
The Firm regards information as proprietary if sharing that information with the public would undermine its competitive position. Proprietary information may include information on products or systems which, if shared with competitors, would render the Firm’s investments therein less valuable. Further, the Firm must regard information as confidential if there are obligations to customers or other counterparty relationships binding the Firm to confidentiality. In the event that any such information is omitted, we shall disclose such and explain the grounds why it has not been disclosed.
The CRD, to which the Firm remains subject as a consequence of the UK CRDIII Implementing Regulations, has three pillars; Pillar 1 deals with minimum capital requirements; Pillar 2 deals with the Internal Capital Adequacy Assessment Process (“ICAAP”) undertaken by a firm and the Supervisory Review and Evaluation Process through which a firm and the Regulator satisfy themselves on the adequacy of capital held by a firm in relation to the risks it faces and; Pillar 3 which deals with public disclosure of risk management policies, capital resources and capital requirements.
The Firm is a MiFID Investment Management firm. It acts solely as agent, so the main protection to our customers is provided through client money and asset arrangements. The Firm’s greatest risks have been identified as business and operational risk. The Firm is required to disclose its risk management objectives and policies for each separate category of risk which include the strategies and processes to manage those risks; the structure and organisation of the relevant risk management function or other appropriate arrangement; the scope and nature of risk reporting and measurement systems; the policies for hedging and mitigating risk, and the strategies and processes for monitoring the continuing effectiveness of hedges and mitigants.
The Firm has assessed business and operational risks in its ICAAP and set out appropriate actions to manage them.
The Firm's primary business risk is its reliance upon revenues from the performance of the existing funds under management. As such, the risk posed to the Firm relates to underperformance resulting in a decline in revenue and the possible loss of clients. This risk is mitigated by the fact that the Firm has longstanding relationships with its clients and these are expected to continue. Additionally, the Firm is supported by its parent, which is a significant investment management firm in Japan.
A number of key operations are outsourced by our clients, typically the Funds to which we provide Investment Management services, to third party providers such as administrators, reducing our exposure to operational risk. The Firm has an operational risk framework, described below, in place to mitigate operational risk. The Firm’s main exposure to credit risk is the risk that management and performance fees cannot be collected and therefore credit risk is low. The Firm holds all cash and performance fee balances with banks assigned high credit ratings.
Market Risk exposure has been assessed by the Firm and is limited to the Firm’s exposure to foreign currency exchange rate risk and hence to any assets held on the Firm’s Balance Sheet denominated in a foreign currency. The Firms Reporting Currency is GBP and all foreign currency assets are converted into GBP where possible on a regular basis.
|Background to the Firm|
The Firm is incorporated in the UK and is authorised and regulated by the FCA as a MiFID Investment Management Firm. The Firm’s activities give it the BIPRU categorisation of a “BIPRU Firm”. Daiwa SB Investments (UK) Ltd. is the only entity covered by this ICAAP. The Firm is a Solo regulated entity with a Non-EEA parent.
The Firm is a BIPRU Firm without an Investment Firm Consolidation Waiver and has elected to deduct Illiquid Assets and calculates Capital Resources under GENPRU 2 Annex 5.
Disclosure: Risk Management Objectives and Policies
Risk Management Objective
The Firm has a risk management objective to develop systems and controls to mitigate risk to within its risk appetite.
The risk management process is overseen by the Managing Director, with the Board taking overall responsibility for this process, as well as forming its own opinion on the effectiveness of its controls. A formal update on operational matters is provided to the Board on a six monthly basis, which includes the presentation of a compliance report.
In addition, the Board decides the Firm’s risk appetite or tolerance for risk and ensures that the Firm has implemented an effective, ongoing process to identify risks, to measure its potential impact and then to ensure that such risks are actively managed. Where appropriate, senior management is accountable to the Board for designing, implementing and monitoring the process of risk management and implementing it into the day-to-day business activities of the Firm.
The Firm has established an internal control framework to govern its risk management process in order to ensure that it has effective systems and controls in place to identify, monitor and manage risks arising in the business. The Firm has adopted a conservative approach to risk.
The Firm undertakes a semi-annual risk review and any risks identified are recorded in its Risk Register. The Risk Register is reviewed and approved by the Board. Appropriate action is taken where risks are identified which fall outside of the Firm's risk tolerance levels or where the need for remedial action is required in respect of identified weaknesses in the Firm's mitigating controls.
The Firm undertakes scenario analysis and stress tests on the most significant risks identified. This informs the Firm how risks are likely to behave and what, if any, impact there is likely to be to our balance sheet. Management accounts demonstrating continued adequacy of the Firm's regulatory capital are also produced on a monthly basis.
The Firm is also subject to internal audits carried out by its parent company periodically.
Disclosure: Compliance with BIPRU 3, BIPRU 4, BIPRU 7 and the Overall Pillar 2 Rule
BIPRU 3 (Credit Risk)
For its Pillar 1 regulatory capital calculation of Credit Risk, under the credit risk capital component the Firm has adopted the standardised approach (BIPRU 3.4) and the simplified method of calculating risk weights (BIPRU 3.5).
BIPRU 4 (Advanced Credit Risk Approach)
The Firm does not adopt the Internal Ratings Based approach and hence this is not applicable.
BIPRU 7 (Market Risk)
Overall Pillar 2 Rule
The Firm has adopted the “Structured” approach to the calculation of its ICAAP Capital Resources Requirement as outlined in the Committee of European Banking Supervisors Paper, 25 January 2006.
The ICAAP assessment is reviewed by the Managing Director and amended where necessary, on an annual basis or when a material change to the business occurs. The Managing Director presents the ICAAP document to the Board of the Firm which reviews and endorses the risk management objective annually or when a material change to the business occurs at the same time as reviewing and signing off the ICAAP document.
Disclosure: Credit Risk and Dilution Risk
The Firm is primarily exposed to credit risk in respect of non-collection of investment management fees billed and cash held on deposit.
The number of credit exposures relating to the Firm's investment management clients is limited. Management fees are earned quarterly and paid promptly such that the Firm considers that there is little risk of default by its clients. It holds all cash and performance fee balances with Banks assigned high credit ratings. Consequently risk of past due or impaired exposures is minimal.
A financial asset is past due when a counterparty has failed to make a payment when contractually due. Impairment is defined as a reduction in the recoverable amount of a fixed asset or goodwill below its carrying amount.
Disclosure: Market Risk
The Firm has a strategy to mitigate the risk of currency fluctuations. When any foreign exchange is received it is immediately converted to Sterling before the month end. Losses arising on foreign exchange movements are monitored on a regular basis and reported to senior management via the monthly management accounts.
Disclosure: Scope of application of directive requirements
The Firm is subject to the disclosures under the UK CRDIII Implementing Regulations. However, it is not a member of a UK Consolidation Group and consequently, does not report on a consolidated basis for accounting and prudential purposes.
Disclosure: Capital Resources
The Firm is a BIPRU Investment firm without an Investment Firm Consolidation Waiver deducting Illiquid Assets under GENPRU 2 Annex 5. Tier 1 Capital comprises Permanent Share Capital and Audited Reserves.
This disclosure is not required as the Firm has not adopted the Internal Ratings Based approach to Credit Risk and therefore is not affected by BIPRU 11.5.4R (3).
This disclosure is not required as the Firm has not adopted the Internal Ratings Based approach to Credit Risk and therefore is not affected by BIPRU 11.5.4R (3) .
This disclosure is not required as the Firm does not have a Trading Book.
This disclosure is not required as the Firm does not make Value Adjustments and Provisions for Impaired exposures that need to be disclosed under BIPRU 11.5.8R (9).
Disclosure: Firms calculating Risk Weighted Exposure Amounts in accordance with the Standardised Approach
This disclosure is not required as the Firm uses the Simplified method of calculating Risk Weights (BIPRU 3.5).
Disclosure: Firms calculating Risk Weighted Exposure amounts using the IRB Approach
This disclosure is not required as the Firm has not adopted the Internal Ratings Based approach to Credit and therefore is not affected by BIPRU 11.5.4R (3).
Disclosure: Non-Trading Book Exposures in Equities
This disclosure is not required as the Firm does not have a Non-Trading Book Exposure to Equities.
Disclosures: Exposures to Interest Rate Risk in the Non-Trading Book
Although the Firm has substantial cash balances on its Balance Sheet, there is currently no significant exposure to Interest Rate fluctuations.
|BIPRU 11.5.17 Disclosures: Securitisation|
This disclosure is not required as the Firm does not Securitise its assets.
The Firm is a Remuneration Code Proportionality Level 3 firm and has applied the rules appropriate to its Proportionality level. The Board is responsible for the Firm’s remuneration policy. All variable remuneration is adjusted in line with capital and liquidity requirements.
This website is issued by Daiwa SB Investments (UK) Ltd., which is authorised and regulated by the Financial Conduct Authority (FCA). Daiwa SB Investments (UK) Ltd. is a limited company incorporated in England, registered number 01660184 and has a registered address at PO Box 18304, 5th Floor, 5 King William Street, London EC4N 7JA, United Kingdom.
The distribution of the information contained in this website in certain countries may be restricted by law and persons who access it are required to inform themselves of and to comply with any such restrictions.
This site is not directed at any person in any jurisdiction where for any reason (including regulatory reasons) the publication or availability of this site is prohibited.
The site is targeted at, and intended for the use of UK and European institutional investors only. This site is not intended for private investors and private investors should not rely on its content. In particular, this site is not intended for any US persons (being residents of the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof), who are excluded from the services or products offered in this site.
Institutions resident in countries other than the UK should consult with their professional advisers as to whether they require any governmental or other consents to enable them to invest in any products or services described in this website.
While Daiwa SB Investments (UK) Ltd. has endeavoured to ensure the accuracy of the information at this website, Daiwa SB Investments (UK) Ltd. does not guarantee or give any warranty as to the accuracy, timeliness or completeness of any information or material at this website.
This site contains links allowing users to access other websites which are not administered or controlled by Daiwa SB Investments (UK) Ltd. Any links on this website to other Internet locations are at your own risk. The content, accuracy, opinions expressed and further links provided at any of such locations are not monitored or endorsed by us and we accept no responsibility for them.
This website is subject to copyright with all rights reserved. You may download the information on this website and reproduce it in hard copy for your personal and non-commercial use only. The information contained on this website may not be reproduced, copied, redistributed, modified, linked into or use for any public or commercial purposes in whole or in part without the prior consent of Daiwa SB Investments (UK) Ltd.
Additionally, you may not offer any part of the contents of the site for sale or distribute such part over any medium, including, but not limited to, distribution by television or radio broadcast, or distribution on a computer network. You may not make any part of the site available as part of another site, whether by hyperlink framing on the Internet or otherwise. The site and the information contained therein may not be used to construct a database of any kind. Nor may the site be stored (in its entirety or in any part) in databases for access by you or any third party or to distribute any database sites containing all or part of the site.
The terms and conditions of use of our website shall be governed by and construed in accordance with the laws of England and Wales and any dispute regarding our website shall be subject to the exclusive jurisdiction of the English courts.
Any personal data information is voluntarily submitted, and it may be held by Daiwa SB Investments (UK) Ltd. on a database to ensure compliance with regulatory requirements and for its own internal purposes. By submitting personal information in this way, you are consenting to its use for these purposes, to which UK data protection laws apply.
We will record the number of visitors to each separate section of our site and track movement between the sections. This helps us to analyse trends and improve the design and layout of our site. ‘Cookies’ may be used for this purpose. In certain cases, ‘cookies’ may also be used for authentication.
Under Rule COBS 2.2.3R of the FCA's Conduct of Business Sourcebook, Daiwa SB Investments (UK) Ltd. (the "Firm") is required to include on this website a disclosure about the nature of its commitment to the UK Financial Reporting Council's Stewardship Code (the "Code") or, where it does not commit to the Code, its alternative investment strategy.
The Firm conducts investment operations to which the aims of the Code are not relevant as we engage in non-UK equity investment only.
Consequently, while the Firm supports the general objectives that underlie the Code, the provisions of the Code are not relevant to the type of trading currently undertaken by the Firm. If the Firm's investment strategy changes in such a manner that the provisions of the Code become relevant, the Firm will amend this disclosure accordingly.
Should you require further information on the firm’s approach to the Code please contact Mr Shinji Ishimaru, Managing Director on:
Daiwa SB Investments (UK) Ltd.
PO Box 18304
5 King William Street
Prepared as at 31 March 2019