AURA HEXAA LLP

Capital Requirements Directive Pillar 3 Disclosure
Date: 31st March 2024

1. Introduction

The Pillar 3 disclosure of AURA HEXAA LLP (AURA HEXAA) is set out below as required by the Financial Conduct Authority’s (FCA) Handbook. AURA HEXAA (“the Firm”) became authorised by the Financial Services Authority on 1 July 2011. The data contained within this disclosure covers the period from 1 April 2023 to the financial year end. AURA HEXAA will be making Pillar 3 disclosures annually. The disclosures will be as at the Accounting Reference Date (“ARD”) which is 31 March. However, where there is a material change AURA HEXAA will make interim Pillar 3 disclosures. This disclosure is an annual disclosure. The accuracy of the Pillar 3 disclosures is the responsibility of and have been reviewed by the Board. The disclosures are not subject to audit except where they are equivalent to those prepared under accounting requirements for inclusion in the financial statements. The FCA framework consists of three ‘Pillars’:
• Pillar 1 sets out the minimum capital requirements that we need to retain to meet our credit, market and operational risk;
• Pillar 2 requires us, and the FCA, to take a view on whether we need to hold additional capital against firm-specific risks not covered by Pillar 1; and
• Pillar 3 requires us to develop and publish a set of disclosures which will allow market participants to assess key information about our underlying risks, risk management controls and capital position.
The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. The disclosure of this document meets our obligation with respect to Pillar 3. We are permitted to omit required disclosures if we believe that the information is immaterial such that omission would be unlikely to change or influence the decision of a reader relying on that information. In addition, we may omit required disclosures where we believe that the information is regarded as proprietary or confidential. In our view, proprietary information is that which, if it were shared, would undermine our competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and counterparties. We have made no omissions on the grounds that it is immaterial, proprietary or confidential.

2. Scope and application of the requirements

AURA HEXAA is authorised and regulated by the Financial Conduct Authority and as such is subject to minimum regulatory capital requirements. The Firm is not a member of a larger group and therefore not subject to consolidated reporting. AURA HEXAA does not hold client money or client assets.
AURA HEXAA is categorised as a BIPRU €50,000 Limited Licence Investment Firm for regulatory purposes, with no additional corporate or partnership levels. Disclosure will be issued on an annual basis unless circumstances warrant a more frequent update.

3. Risk management

AURA HEXAA’s approach to risk management is predicated on the need to manage the full range of risks facing AURA HEXAA including operational, business, liquidity, credit and market risks. AURA HEXAA’s overriding aim in this area is to minimise the risks to its clients, its counterparties and other stakeholders and to ensure it remains in full compliance with regulatory and legal requirements.
AURA HEXAA’s Board determines its business strategy and risk appetite; accordingly, it is responsible for the oversight the implementation of a risk management framework that recognises the risks which the business faces. The Committee meets on a regular basis and discusses current projections for profitability and regulatory capital management, business planning and risk management.
AURA HEXAA’s risk management framework incorporates analysis of the impact of each material risk on the business, the probability of each risk occurring and the procedures in place for its mitigation.
The relevant risks applicable to AURA HEXAA are categorised as operational, business, credit, market and liquidity risks. These are quantified in our Internal Capital Adequacy Assessment Process (ICAAP) and Pillar 2 disclosure
Operational risk
Operational risk is defined by AURA HEXAA as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
AURA HEXAA’s risk management framework emphasises operational risk. Management reviews all aspects of the business on a regular basis to ensure operational risks have been identified and effective controls put in place to mitigate the risks identified, so the combination of the impact assessment and probability of each risk is kept to an acceptable level.
AURA HEXAA has identified a number of key operational risks; amongst these are key man risk, client concentration risk, staff errors and IT security or system failures.
Business risk
Business risk is the risk of loss inherent in AURA HEXAA’s operating, business and industry environment.
AURA HEXAA’s main business risk relates to a possible fall in assets under management and a consequent diminution in investment management fees. As such, poor performance, service and or adverse market conditions could also impact revenues and hinder the ability to acquire new clients.
Business risk exposure is mitigated, to a certain extent by the high levels of capital held by AURA HEXAA, which ensure operating expenses coverage for a meaningful period.
Credit risk
Credit risk is the risk of financial loss if a client, fund or counterparty fails to meet its contractual obligations.
As AURA HEXAA does not provide credit to clients, its credit exposure to clients is limited to accrued fees. The mitigation of these risks is governed by the terms and conditions of individual agreements with clients.
AURA HEXAA is also exposed to the credit risk of its custodian banks, and to the custodian banks of its clients, both in respect of the Firm’s own cash held on deposit and for the fees owed from clients to AURA HEXAA.
AURA HEXAA constantly monitors and actively attempts to diversify its counterparties and jurisdiction risks.
Market risk
Market risk is categorised as the impact that adverse market conditions could have on AURA HEXAA’s revenues.
AURA HEXAA focuses on wealth preservation; consequently, the market risk profile of clients’ portfolios has historically limited the Firm’s market risk when adverse market conditions occurred.
AURA HEXAA’s business development team is constantly focused on increasing assets under management, while the Firm’s investor relations effort focuses on retention and client satisfaction.
AURA HEXAA takes no proprietary market risk other than foreign exchange risk in respect of its quarterly management fees that is occasionally hedged.
Liquidity risk
We have consistently maintained sufficient liquid resources to meet our obligations. Cash flow and capital forecasting is performed on a regular basis and quantified in our ICAAP. Excess cash is held on deposit or in interest bearing accounts at institutions with an investment grade credit rating.

4. Capital resources and requirements (audited as at 31st March 2024)

AURA HEXAA’s Pillar 1 requirement is calculated as the higher of:
• The Base Capital Requirement (€50k); or
• The sum of the Credit Risk Capital Requirement and the Market Risk Capital Requirement; or
• The Fixed Overheads Requirement.
In the opinion of the Senior Management the highest of these three is always likely to be the Fixed Overheads Requirement and therefore none of the Base Capital Requirement, the Credit Risk Capital Requirement or the Market Risk Capital Requirement are material to AURA HEXAA.
AURA HEXAA is a BIPRU Investment Firm without an Investment Firm Consolidation Waiver deducting Material Holdings under (GENPRU 2 Annex 4).

Tier 1 Capital	(2024) £6,885,577
Deductions	(2023) £6,601,056
Tier 2 Capital	£0
Deductions	£0
Capital Resources	£0
Tier 3 Capital	£0
Deductions	£0
Total Capital	(2024) £416,373

AURA HEXAA holds capital resources of £416,373 against a capital resource requirement of £75,000
AURA HEXAA has undertaken an ICARA to determine whether it needs any further regulatory capital due to the operational, business, credit, market and other risks it faces, this is AURA HEXAA’s Pillar 2 requirement. As part of the ICAAP, AURA HEXAA considered risks to capital combined with stress testing and scenario analysis of operational and business risks as well as an assessment of costs to wind down the business. This analysis concluded that AURA HEXAA has adequate capital to withstand unexpected losses arising from these risks. As at the date of this report AURA HEXAA has a surplus of capital resources over its Pillar 1 and Pillar 2 capital resources requirement.

5. Remuneration disclosure

The Firm is subject to the remuneration rules, which are contained in SYSC Chapter 19C of the FCA Handbook (the “Code”).
The code covers all aspects of remuneration, including both fixed and variable remuneration. The Firm understands fixed remuneration to consist of payments or benefits without consideration of any performance criteria, whilst variable remunerations refer to additional payments or benefits dependant on performance or contractual criteria.
Under the Code, the Remuneration Committee must report annually on the remuneration policy and practice for partners and employees termed Code Staff. Code Staff are those “who perform a significant influence function, senior management and risk takers whose professional activities could have a material impact on a firm’s risk profile”. An annual review of the firm’s risk profile is conducted in order to allow the Board to determine the ‘Code Staff’ population and a record is kept by the Compliance team.
AURA HEXAA’s Remuneration Policy (the “Policy”) is determined by the Remuneration Committee, which is the Board. The Policy provides a framework to attract, retain and reward partners and employees to achieve AURA HEXAA’s strategic and business objectives within its risk appetite and risk management framework. The remuneration of all partners and employees, including senior management, is reviewed annually by the Board.
The Policy itself is reviewed by the Remuneration Committee to ensure that it remains consistent with the Remuneration Code Principles and AURA HEXAA’s objectives. The Remuneration Committee will use all information available to it in order to carry out its responsibilities under the Code, including information on risk and financial performance. In addition, the Compliance department, as part of AURA HEXAA’s regulatory monitoring, will include a review of the implementation of this Policy.
Link between pay and performance
Remuneration includes, but is not restricted to, salaries, fixed allocations, bonuses, variable allocations, long-term incentive plans, options, medical insurance and other benefits. Salaries/fixed allocations are set in the context of market data and the knowledge and skills required for the particular role and at a level to retain, and when necessary, attract skilled individuals.
All variable remuneration is paid directly by the Firm and agreed by the Remuneration Committee on at least an annual basis. Variable remuneration is adjusted in line with capital and liquidity requirements as well as our performance. The Firm ensures that our remuneration structure promotes effective risk management and balances the fixed and variable remuneration components for all Code and Non-Code staff. Total Remuneration is based on balancing both financial and nonfinancial indicators together with the performance of the Firm. We will monitor the fixed to variable compensation to ensure we comply with the Remuneration Code with respect to Total Compensation where applicable. The measurement of financial performance is based principally on profits and not on revenue or turnover.
Performance assessment will not relate solely to financial criteria but will also include compliance with regulatory obligations and adherence to effective risk management. In keeping with AURA HEXAA’s long-term objectives, the assessment of performance will take into account longerterm performance and payment of any such performance related bonuses/variable allocations may need to be spread over more than one year to take account of the firm’s business cycle.
Quantitative remuneration information
AURA HEXAA is required to disclose aggregate information on remuneration in respect of its Code Staff, broken down by business area and by senior management and other Code Staff. The relatively small size and lack of complexity of its business is such that AURA HEXAA does not regard itself as operating or needing to operate separate ‘business areas’ and the following aggregate remuneration data should be read in that context. AURA HEXAA had 8 Remuneration Code staff during the financial year to 31 March 2024, being the Significant Influence Function holders of the Group’s regulated entities, which fall within the Code.
Aggregate Remuneration
Senior Management*: £189,892
Other Code Staff: £88,563
*Senior Management is comprised of all partners; of AURA HEXAA’s Board during all or part of the financial year. This remuneration disclosure is made under the Basel Pillar 3 framework.
During the year and as part of the year-end review process Compliance report to the Board on any activities, incidents or events that warrant consideration in making compensation decisions.
Approved: Board
Date: 31 March 2024