Columbia Threadneedle (EM) Investments
LimitedMIFIDPRU 8 Disclosure
As at 31 December 2023

Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023
Table of Contents
1.

Summary........................................................................................................................................................................................... 3

1.1

Introduction ........................................................................................................................................................................................ 3

1.2

Purpose.............................................................................................................................................................................................. 3

1.3

Background ........................................................................................................................................................................................ 3

1.4

Basis of Disclosures ........................................................................................................................................................................... 3

1.5

Frequency of disclosure ..................................................................................................................................................................... 3

1.6

Media and location of disclosure......................................................................................................................................................... 3

2.

Governance arrangements .............................................................................................................................................................. 4

2.1

Board of Directors .............................................................................................................................................................................. 4

2.2

EMEA Executive Management ........................................................................................................................................................... 4

2.3

CTIUKIL & TAMUKIHL Governance Committees ............................................................................................................................... 5

2.4

Directorships held by members of the management body .................................................................................................................. 5

2.5

FCA Senior Management Arrangements, Systems and Controls ........................................................................................................ 6

2.6

Diversity ............................................................................................................................................................................................. 6

3.

Risk Management objectives and policies ..................................................................................................................................... 7

3.1

Enterprise Risk Management Framework ........................................................................................................................................... 7

3.2

Policies and procedures ..................................................................................................................................................................... 7

3.3

Risk Management Structure and Operations ...................................................................................................................................... 8

3.4

Risk Appetite Framework ................................................................................................................................................................... 9

3.5

Risk identification and assessment ..................................................................................................................................................... 9

3.6

Risk management objectives .............................................................................................................................................................. 94.

Own Funds...................................................................................................................................................................................... 11

4.1

Composition of regulatory Own Funds .............................................................................................................................................. 11

4.2

Reconciliation of regulatory Own Funds to balance sheet in the audited financial statements ........................................................... 12

4.3

Own Funds: main features of Own Funds instruments issued by CT(EM)L....................................................................................... 12

5.

Own Funds Requirement ............................................................................................................................................................... 13

5.1

Permanent Minimum Requirement ................................................................................................................................................... 13

5.2

Fixed Overheads Requirement ......................................................................................................................................................... 13

5.3

K-Factor Requirement ...................................................................................................................................................................... 13

5.4

Adequacy of Own Funds approach................................................................................................................................................... 13

6.

Remuneration policy and procedures........................................................................................................................................... 15

6.1

Approach and objectives of financial incentives ................................................................................................................................ 15

6.2

Decision-making process for remuneration policy ............................................................................................................................. 15

6.3

Material Risk Taker Identification ...................................................................................................................................................... 15

6.4

Components of remuneration ........................................................................................................................................................... 15

6.5

Determining Incentive Remuneration Pools ...................................................................................................................................... 16

6.6

Determining Individual Incentive Awards .......................................................................................................................................... 16

6.7

Delivery of Total Incentives............................................................................................................................................................... 16

6.8

Quantitative Disclosure..................................................................................................................................................................... 172

Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

1.

Summary

1.1

Introduction
Columbia Threadneedle (EM) Investments Limited (“CT(EM)L” or “the Company”) is a subsidiary within the
Columbia Threadneedle Investments UK International Limited (“CTIUKIL”) Group of Companies and forms partof the EMEA business of Columbia Threadneedle Investments, the global asset management group of
Ameriprise Financial, Inc. (“Ameriprise”), a leading US-based financial services provider. The combined
operations of CTIUKIL and TAM UK International Holdings Limited (“TAMUKIHL”) are referred to as “theGroup” or “Columbia Threadneedle Investments”.

1.2

PurposeThe disclosures included in this document are prepared in accordance with the Financial Conduct Authority(“FCA”) Prudential Sourcebook for Markets in Financial Instruments Directive Investment Firms (“MIFIDPRU”).
It sets out CT(EM)L’s public disclosures in relation to Governance Arrangements, Risk Management Objectives
and Policies, Own Funds, Own Funds Requirements, Remuneration and Investment Policy as required under
MIFIDPRU 8 as at 31 December 2023.

1.3

Background
The Investment Firms Prudential Regime (“IFPR”) came into effect on 1 January 2022 as a new regime for UK
firms authorised under the Markets in Financial Instruments Directive (“MiFID”). IFPR was implemented by the
FCA as prudential regulation within MIFIDPRU, which seeks to address the potential harm posed by investment
firms to their clients and the markets they operate in. MIFIDPRU disclosure aims to encourage market disciplineby developing a set of disclosure requirements which provides market participants with key information on
CT(EM)L’s Own Funds, behaviour, and culture.

1.4

Basis of Disclosures
The disclosures in this document are made in respect of CT(EM)L, which is incorporated in England andauthorised by the FCA and classified as a non-small non-interconnected (“Non-SNI”) MIFIDPRU Investment
firm based on an assessment of the criteria set out in MIFIDPRU 1.2.1.
CT(EM)L is required to disclose on an individual entity basis and these disclosures have been prepared in linewith the requirements described in MIFIDPRU 8.
CT(EM)L is exempt from the requirement to provide investment policy disclosures as it is not categorised as alarger non-SNI firm due to meeting the conditions set out in MIFIDPRU 7.1.4, i.e., CT(EM)L’s average assets
over the preceding four-year period are less than £100 million and it has no trading book business or derivative
exposures.

1.5

Frequency of disclosure
These disclosures are published at least on an annual basis in line with the annual publication of CT(EM)L’s
audited financial statements, with reference period being 31 December 2023. Revised disclosures will be
published should significant changes occur to CT(EM)L’s business model.

1.6Media and location of disclosure
These disclosures are published on the Columbia
https://www.columbiathreadneedle.com/en/disclosures/

Threadneedle

Investments

website:The disclosures have been prepared as required under MIFIDPRU 8 guidelines and for no other purpose. They
do not constitute any form of financial statement and must not be relied upon in making any judgement about
CT(EM)L.

3

Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

2.

Governance arrangements
As a wholly owned subsidiary of the Group and Ameriprise, CT(EM)L’s corporate governance structure isembedded within Group’s governance framework. Each subsidiary of the Group, including CT(EM)L, have a
Board of Director or equivalent Management Committee.
Given CT(EM)L forms part of Columbia Threadneedle Investments which manages its operations on a grouplevel basis, all of CT(EM)L’s activities are covered by the Group’s policies and processes.
The below simplified diagram demonstrates how CT(EM)L as a legal entity is structured within the overall Group:
Figure 1: Organisational Structure

2.1

Board of Directors
The Governance of the Company is the ultimate responsibility of the Board of Directors of CT(EM)L (the“CT(EM)L Board”). The CT(EM)L Board has two fundamental objectives:
i.
ii.

decision-making function with respect to the formulation, management of business goals and throughthe approval and certain significant actions; andoversight and review of management decisions, adequacy of systems and controls and implementationof policies.

CT(EM)L Board has delegated its management responsibility to the Head of EMEA, who has full authority forrunning the Group’s day-to-day operations and exercises certain delegated authorities through two separate
executive governance bodies, the EMEA Business Management Committee (“BMC”) and the EMEA Financial
and Operational Risk Committee (“FORC”) (together the “EMEA Executive Management Committees").
2.2

EMEA Executive Management
The EMEA Executive Management Committees consist of the Group’s executive management team, including
those who hold SMF functions and/or prescribed responsibilities under the FCA Senior Managers & Certification
Regime. The EMEA Executive Management Committees meet to ensure that all affairs of the business arecohesively managed, and that clients’ interests and the potential capital and liquidity implications of decisions
are considered and reflected in the Internal Capital Adequacy and Risk Assessment (“ICARA”) appropriately by
the most senior members of the Group.
The objectives of EMEA Executive Management Committees are:4

Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023▪

BMC: to manage and monitor delivery against the Group’s strategic and financial plans, including delivery
against client needs and interests; and▪

FORC: to manage and mitigate current and prospective risks (including risks to client interests), monitor theeffectiveness of controls, and consider/oversee the Group and subsidiaries’ capital and liquidity positions
and risk appetite through its sub-delegated committees, namely the EMEA Financial Risk Management
Committee (“EMEA FRMC”) and the EMEA Operational Risk Management Committee (“EMEA ORMC”).
o

The EMEA FRMC operates under the delegated authority of the EMEA FORC. It is the day to day
working committee for the identification, assessment and management of financial risks including
Liquidity, Capital, Market, Investment, Credit and Product risks, in line with Ameriprise Policy, Local
Board and Regulatory requirements.

o

The EMEA ORMC, a sub-committee of the EMEA FORC, has been established as the day to day
working committee for the identification, assessment, and management of non-financial risks i.e.,
Operational, Reputational, Strategic, Legal & Compliance risks, in line with Ameriprise Policy and theGroup Board and Regulatory requirements.

This structure is not intended to limit or narrow the scope of either committee, i.e., the EMEA FORC will consider
business implications in its decision making and vice versa.
2.3

CTIUKIL & TAMUKIHL Governance Committees
CT(EM)L is classified as a non-SNI MIFIDPRU investment firm which meets the conditions outlined in
MIFIDPRU 7.1.4R and therefore is not required to establish its own Risk, Remuneration and Nomination
Committees.
The Group is supported by the Audit and Risk Committee, the Remuneration Committee and the Nominatingand Governance Committee as part of the governance framework which in turn has an oversight of the Groupsubsidiaries including CT(EM)L.
The objectives of these committees are set out below:

2.4▪

Audit and Risk Committee acts as an advisory committee in order to assist the combined Board of
CTIUKIL & TAMUKIHL (“Group Board”) in carrying out its responsibilities as they relate to the risk/harmmanagement, internal control, and the conduct of its business across EMEA in accordance with regulation,
legislation, and business best practice.

▪

Remuneration Committee establishes and reviews the philosophy and objectives that will govern theGroup’s reward and benefit programme, reviews and approves reward and benefit plans, policies, andpractices; directly oversees the remuneration of EMEA’s Control Functions (Risk, Compliance and Internal
Audit) to ensure conflicts of interest are avoided, and oversee and approves EMEA’s remuneration including
its compliance with relevant regulatory standards.

▪

Nominating and Governance Committee is authorised by the Board to assume a leadership role inshaping the corporate governance of the Group of Companies. The Group remuneration policies cover
CT(EM)L’s directors as well as the Group employees who provide services to CT(EM)L and ensure that all
persons who are involved in running CT(EM)L or have other key functions are at all times fit and proper.

Directorships held by members of the management body
CT(EM)L maintains a record of the number of directorships (executive and non-executive) held by each memberof the CT(EM)L Board. The following directorships are not within the scope of this disclosure requirement andare therefore not disclosed:▪

Executive and non-executive directorships held in organisations which do not pursue predominantly
commercial objectives (e.g., charitable organisations).

▪

Executive and non-executive directorships held within the same group or within an undertaking (including a
non-financial sector entity) in which CT(EM)L holds a qualifying holding.

The table below sets out the number of external directorships, as prescribed by MIFIDPRU 8.3.2R, held bymembers of the CT(EM)L Board as at 31 December 2023.

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Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023
Table 1: Number of external directorships

Name of Director
David Logan (appointed 06 October 2015)

Richard Watts (appointed 24 February 2023)

Position within the
Company
Director, Head of EMEA,
Columbia Threadneedle
Investments
Director, Chief Investment
Officer, Columbia
Threadneedle Investments

Number of
directorships*
00* Number of external directorships held by the management body which pursue predominantly commercial objectives.

2.5

FCA Senior Management Arrangements, Systems and Controls
CT(EM)L complies with Senior Managers and Certification Regime (“SMCR”) for FCA solo-regulated firms andfalls under the core firm category. The entity is required to comply with the baseline requirements due to its sizeand complexity. However, CT(EM)L Board and members of BMC and FORC are governed by the Group-wide
Terms of References, which include the responsibilities and requirements listed under FCA’s Senior
Management Arrangements and Controls rulebook (“SYSC”) 4.3A.1 which ensures that the management bodydefines, oversees and is accountable for the implementation of governance arrangements that ensure effective
and prudent management of the firm, including the segregation of duties in the organisation and the preventionof conflicts of interest, and in a manner that promotes the integrity of the market and the interests of clients.

2.6

Diversity
CT(EM)L’s approach and efforts to achieve diverse representation are based on promoting the Diversity, Equity
and Inclusion (“DEI”) framework in place across the Group.
This aims to foster a culture in which all employees feel safe, included, valued, and respected where we embrace
the unique contributions of everyone in our organisation and empower them to deliver value for our diverse
clients and communities.
Our business is driven by the capabilities and commitment of our people. Attracting, retaining and developing
our people is central to our long-term success. Culture is essential to help guide decision-making and dailyinteractions. We work to be inclusive, embrace individual differences and develop our people as they advancein their careers.
The primary objective is to change the profile of our employee base over time to better reflect our client baseand the broader population by increasing the percentage of women, and all under-represented groups acrossevery level of the organisation.
Actions to achieve this centre upon:▪

Recruitment: A talent strategy that improves sourcing and recruiting of diverse candidates at all levels of
the organisation to better reflect our clients and the markets in which we operate.

▪

Development and Leadership: Training and programmes, such as our DEI-specific curriculum and Women’s
Leadership Academy, to continue to foster a culture that is inclusive, and supports employees to develop
and advance in their careers.

▪

Advocacy: Champion DEI issues, raising awareness internally and externally through our leadership teamand corporate partnerships.

▪

Governance and Accountability: Leadership oversight and goals to drive clear accountability for DEI among
senior leaders and all employees.

As a signatory to HM Treasury’s Women in Finance Charter, Columbia Threadneedle Investments has targets
to grow the representation of women at all levels of our business, including the TAMUKIHL & CTIUKIL Board.
We actively monitor progress to ensure that initiatives and actions have the intended impact.
Columbia Threadneedle Investments additionally publishes, on an annual basis, a Gender Pay Report (UKGender Pay Gap Report 2023.pdf ) which sets out the Group’s progress in this regard.
Columbia Threadneedle Investments’ strategic approach is aligned with that of our parent company Ameriprise,
sharing an organisation-wide approach and resources to advance diversity and inclusion to deliver strong
business results. Further information can be found on: https://www.columbiathreadneedle.co.uk/en/inst/aboutus/responsible-business/responsible-employer/

6Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

3.

Risk Management objectives and policies

3.1

Enterprise Risk Management Framework
CT(EM)L is part of the Group-wide Enterprise Risk Management Framework (“ERM”). The ERM programme
provides a framework for the identification, monitoring and management of risks and harms, including
compliance with applicable local regulatory requirements and expectations. The ERM framework is designed toenable the Group and its subsidiaries to protect the interests of its clients by managing all elements of risk andharms on a forward-looking basis.
The Group’s strategy, business model and related processes and controls includes the investment activities
and operations conducted by CT(EM)L. Therefore, the Group’s systems of internal controls and risk/harms
management reflect CT(EM)L related activities. The management of risk and harms within CT(EM)L forms partof the overall Group risk management framework, which sets out to identify, monitor, report and manage risk
and harms throughout the Group. The framework is designed to embed an awareness of risk into all strategicand operational business decisions.
The figure below sets out the formal statutory governance framework within EMEA. The Group and CT(EM)LBoard meets quarterly, inter alia, to consider client interests, overall business strategy, set budgets and review
forecasts, supervise compliance with regulatory and legal requirements, review capital adequacy position,liquidity position, approve off budget expenditure, including acquisitions, and approve senior level appointments.
Figure 2: Governance Framework of Columbia Threadneedle Investments EMEATAMUKIHL is the deemed parent for the combined B Pillar Group (“CTIUKIL”) and C Pillar Group (“TAMUKIHL”), which meets on a combined basis with CTIUKIL from Q4 2023
Financial Risk Management Committee (“FRMC”) and Operational Risk Management Committee (“ORMC”)

1
2

3.2

Policies and procedures
The Group has adopted comprehensive policies and procedures which govern management of risk and harms.
These policies and procedures have been adopted by the FORC and BMC for management of risk in all EMEA
business units including CT(EM)L. The commitment to maintain adequate capital and liquidity resources at theGroup level and its material subsidiaries has been laid out in the Capital Risk Management Policy and Liquidity
Risk Management Policy respectively. At the top-down level, the policies establish the corporate parameters
for risk appetite and management of all risks and harms to accurately reflect the Group’s risk profile.
The Ameriprise Enterprise Risk Policy Framework links to the Group’s Key Risk categories (strategic risk,
operational risk, financial risk, legal and compliance risk) which seeks to ensure that risk management isembedded into the day-to-day business operations of the Group, within agreed tolerances. All policy andprocedure documents are recorded in a central repository and must be reviewed by their owners at least
annually. The effectiveness of Group’s risk management process is assessed by Internal Audit which provides
independent assurance of the suitability and effectiveness of the Group’s processes, controls and ERM
Framework, including management’s execution of its responsibilities to seek to ensure an effective system of7Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

internal controls, risk/harm management, and compliance is embedded throughout the Group and its
subsidiaries including CT(EM)L.
3.3

Risk Management Structure and Operations
The CT(EM)L Board has primary responsibility for both the management and the oversight of the Company’s
risks together with the quality and effectiveness of risk management, compliance, and response to regulatory
frameworks.
CT(EM)L Board meet at least on a quarterly basis to consider reports and issues escalated by their delegatedgroups and committees. Further information on the Group’s governance structure and key Committees can befound in Section 2.1 of this disclosure document.
EMEA ORMC and EMEA FRMC have been established to create a robust and efficient forum to focus on therisks to the successful attainment of the Company’s business strategy, including consideration of operationalrisks, financial risks, the review of any forward looking emerging and strategic risks. These committees report
directly into the FORC and meets monthly.
The FORC is chaired by the EMEA Chief Risk Officer and is commonly composed of business line management,
Finance and with representatives from the Group Risk, Compliance, Audit and Legal teams. It is the FORC’s
responsibility to ensure that the Group Audit & Risk Committee and ultimately the Group and CT(EM)L Board
are cognisant of all material issues, including the Company’s risk management objectives around own funds,
concentration risk, and liquidity risks as addressed by MIFIDPRU 4, 5, and 6 respectively.
To enforce these clear lines of responsibility, the Group follows a three lines of defence structured approach,see below for further detail, as well as operating under the FCA’s SMCR, which aims to improve individual
accountability and awareness of conduct issues across those working in financial services by:•••encouraging staff to take personal responsibility for their activities and the risks these give rise to;improving conduct at all levels; andmaking sure firms and staff clearly understand and can show who is responsible and accountable where
issues occur.

Three lines of defence
The Group Board is responsible for establishing the Columbia Threadneedle Investments’ Risk Appetite andStrategy, which includes approving the Group’s risk management framework, policies, methodologies, and roles
and responsibilities.
The Group Board is also responsible for setting the tone from the top and communicating Columbia
Threadneedle Investments’ four values — Client Focus, Excellence, Integrity and Respect, which are core to
the Group’s culture, strategy and processes. All staff share responsibility for delivering these values across thebusiness.
The “three lines of defence” model helps to further embed the Group’s four key values and ensures clear
ownership of its Risk Management Framework, which can be summarised as follows:
Table 2: Three Lines of Defence ModelLines of defence
First LineBusiness units
Second Line
Risk and Compliance
Third LineInternal audit

Roles and responsibilities
Undertake day-to-day risk management
Comply with the ERM Framework, Policies and Procedures
Apply internal management controls and improvement actions
Oversee and challenge risk management in the First Line of Defence
Provide guidance and direction to the First Line of Defence
Develop and communicate the ERM Framework
Independent perspective and challenge process
Reviews and oversees both First and Second line of Defence

All lines of defence report to the board of directors and senior management, either directly through formal
reporting or through delegated Committees.

8Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

3.4

Risk Appetite Framework
The Group Board established a risk appetite for Columbia Threadneedle which captures activities carried out
by CT(EM)L. It expresses the Group’s tolerance for risks that it faces. It defines the risks that the Group is
prepared to accept in order to deliver its strategic objectives. These allow management and the Group Board tomonitor the Columbia Threadneedle’s exposure to risk and ensure that it stays within the Group’s tolerance.
Should a risk exceed its tolerance thresholds, the Group considers if and/or how it should:•

mitigate the risk where possible;•

explicitly accept the risk and consider increasing the risk appetite; or•

scale down or terminate the activity.

The Group employs a range of approaches to monitor and report risks throughout the organisation in the context
of its risk appetite. These include a Risk and Control Self-Assessment process, dashboards to report the status
and direction of key risks, a rigorous process to identify, record and resolve risk events, and policies andprocedures covering the Group’s risks and processes.
Columbia Threadneedle Investments’ risk appetite may change as its business evolves. The Group Board
therefore reviews and formally approves the risk appetite annually, as well as when the Group’s risks, or themarkets in which it operates, are materially altered.
The framework is embedded within the Group’s core business processes and is used as a tool for decisionmaking and strategic analysis. All the elements of the risk framework inform one another, leading to a cycle ofcontinuous improvement. This enables the Group’s overall solvency needs to be assessed in a continuous andprospective way in relation to its risk profile.
3.5

Risk identification and assessment
The Group and its subsidiaries (including CT(EM)L) are exposed to a number of risks and potential harms inpursuing its business strategy, these have been grouped into the following four categories in the Risk Library:•strategic risk is the risk arising from adverse business decisions, decisions that are not aligned withthe organisation’s overall strategy or mission, or lack of responsiveness to environmental changes.

•

operational risk is the risk of loss resulting from internal processes which are inadequate or have failed
due to human errors, system failures, or external events.

•

legal and compliance risk is the risk of loss due to a failure to comply with law, legal agreements or
regulations.

•financial risk is the risk of loss due to stresses impacting the Group’s balance sheet and profit andloss.

The Group has linked potential harms to clients, market and the firm against each risk included in the Risk
Library.
The Group has allocated its internal capital requirement assessment to its subsidiaries including CT(EM)L using
an appropriate basis.
The allocated capital requirement to CT(EM)L has been split between relevant K-Factors and where any otherrisks and associated harms exist that cannot be assigned to any regulatory defined K-Factors under IFPR, thesehave been assigned to K-Other within the ICARA.
3.6

Risk management objectives
The Group, including CT(EM)L, analyses its Own Funds and liquid asset needs, as applicable, based on thepotential exposure of material harms as identified through risks as documented in its Risk Library and throughthe stress testing and wind-down assessments embedded in the ICARA process.
The Group, including CT(EM)L, complies with MIFIDPRU 7.4 that states that a firm must have appropriate
systems and controls in place to identify, monitor, and where appropriate, reduce all potential harms that may
result from ongoing operations or winding down of the business. The ERM framework facilitates a common
approach to the identification, assessment and management of risk and harms across the Group and is also
responsible for capturing, analysing and communicating the risk and control profile to the FORC and othergovernance bodies (ORMC, FRMC, etc).
Own Funds requirement (MIFIDPRU 4)
CT(EM)L’s Own Funds Requirement is monitored, managed, and reported in accordance with the Group’s
Capital Risk Management Policy. The objective of this policy is to provide guidelines to ensure effective and9Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

efficient management of capital across the Group and its subsidiaries. The Own Funds requirement is calculated
in accordance with Section 5.1.
CT(EM)L is required to hold the minimum amount of Own Funds to address potential material harms arisingfrom MiFID activities (through the K-factor requirement) and to minimise the potential material harms arisingfrom a wind-down (through the Fixed Overheads Requirement). CT(EM)L’s Own Funds Requirement is driven
by the Fixed Overheads Requirement (“FOR”) as at 31 December 2023.
Concentration risk (MIFIDPRU 5)
CT(EM)L does not undertake or deal on its own account and therefore concentration risk exposures as definedin MIFIDPRU 5.3 to MIFIDPRU 5.10 are not applicable to CT(EM)L. However, CT(EM)L is exposed to nontrading book concentration risk arising from earnings associated to key clients or exposures against
counterparties. Appropriate metrics have been set at the Group level to seek to mitigate the harms arising fromconcentration risks.
CT(EM)L monitors client earnings concentration and counterparty risk as reported quarterly within MIF004
returns to the FCA. Additionally, CT(EM)L’s client concentration risk is considered, as part of Group’s harms
assessment through the ICARA process, explicitly as part of the following assessments:•

Capital planning and stress testing where assumptions are made on the loss or reduction of key clients’portfolios to assess the impact on profitability and capital position.

•

Liquidity stress testing is used to determine the Liquid Assets Threshold Requirement (“LATR”) for theGroup and its regulated subsidiaries including CT(EM)L.

•

Wind-Down where the loss of key clients of CT(EM)L are considered as part of the wind-down plans.

Liquidity risk (MIFIDPRU 6)
Liquidity risk may arise as a result of CT(EM)L being unable to meet its obligations as they become due, either
because (1) the company is required to pay its liabilities earlier than expected and / or (2) because of its inability
to realise assets in order to meet obligations as they fall due or being able to realise assets but only by suffering
unacceptable financial loss. Any potential financial harms to CT(EM)L and any impact to clients including
vendors and outsourced providers are mitigated through the Group Corporate Liquidity Risk Policy andManagement Framework (“Liquidity Policy”). The Liquidity Policy documents the management framework,
responsibilities, processes, and contingency arrangements of the Group and its subsidiaries. The Liquidity
Policy ensures that all foreseeable financial commitments can be met as they fall due, and that, if necessary,
access to funding is available and cost-effective.
Liquidity is managed daily with real-time cash management / monitoring of balances in place and reporting for
regulated entities. This is in addition to monthly reviews and forward-looking assessments of liquidity on an
entity basis including CT(EM)L.
Liquidity risk is also considered as part of CT(EM)L’s harm assessment within the Group ICARA process, withliquidity stress-testing undertaken to understand the potential impact of stress events on the Group’s liquidity
position as well as that of subsidiaries including CT(EM)L. The Group ICARA is used to set the Group andCT(EM)L’s liquidity risk tolerances.

10Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

4.

Own Funds

4.1

Composition of regulatory Own Funds
CT(EM)L Own Funds consist of share capital, retained earnings and other reserves. Own Funds have been
calculated in accordance with the requirements set out in MIFIDPRU 3. Profits are only included within retained
earnings once they have been verified by independent auditor. CT(EM)L does not have any hybrid capital (e.g.,AT1) instruments, Tier 2 capital or any capital which provides CT(EM)L with incentives to redeem that capital.
The tables below are based on CT(EM)L Financial Statements as at 31 December 2023.
Table 3: OF1 Composition of Regulatory Own Funds

No

Item

Amount(£’000)1

Own Funds1

23,6552

Tier 1 capital

23,655

3

Common Equity Tier 1 capital

23,655

4

Fully paid-up capital instruments

17,5005

Share premium

6

Retained earnings

7

Accumulated other comprehensive income-

8

Other reserves-

9

Adjustments to CET1 due to prudential filters-

10

Other funds

11

(218)

20

(-) Total deductions from Common Equity Tier 1
CET1: Other capital elements, deductions andadjustments
Additional Tier 1 capital

21

Fully paid up, directly issued capital instruments-

22

Share premium

-

23

-

25

(-) Total deductions from Common Equity Tier 1
Additional Tier 1: Other capital elements, deductions andadjustments
Tier 2 capital

26

Fully paid up, directly issued capital instruments-

27

Share premium-

28(-) Total deductions from Tier 2Tier 2: Other capital elements, deductions andadjustments

-

19

24

29
1

Source based on reference
numbers/letters of thebalance sheet in the audited
financial statements

Note 20

6,373

-

(218)

Note 12---Own Funds include audited profits per financial statements for the year ended 31 December 2023.

11

Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

4.2

Reconciliation of regulatory Own Funds to balance sheet in the audited financial statements
The table below shows a reconciliation between Own Funds and the entity’s balance sheet in the audited
financial statements as at 31 December 2023, where the assets and liabilities have been identified by theirrespective classes.
Table 4: Reconciliation of Regulatory Own Funds to Balance Sheet

OF2: Own Funds: Reconciliation of Regulatory Own Funds to Balance Sheet in the audited Financial Statements, as at 31
December 2023 (£’000)
A
B
C
Item

Balance sheet as inpublished/audited
financial statements

Underregulatory
scope ofconsolidation

Cross reference to template OF1Assets – Breakdown by asset classes according to the balance sheet in the audited financial statements
Non- current assets
1

Deferred tax assets

2

Other financial assets
Current assets
Trade and other receivables
Loan to related party
Other financial assets
Cash and cash equivalents
Total Assets

3
4
5
6

218
822

19 – Other capital elements, deductions, andadjustments

1,324
21,000411
3,469
27,244

Liabilities – Breakdown by liability classes according to the balance sheet in the audited financial statements
1

2

Non-Current Liabilities
Creditors: Amounts falling due
after more than one year
Current Liabilities
Creditors: Amounts falling due
within one year
Total Liabilities

Shareholders’ Equity
1
Called up share capital
Retained earnings
2

Total Shareholders’ Equity

4.3

1,243

2,128
3,371
17,5006,373
23,873

4 – Fully paid-up capital instruments
6 – Retained earnings

Own Funds: main features of Own Funds instruments issued by CT(EM)LThe following table shows information on the Common Equity Tier 1 instruments issue by CT(EM)L.
Table 5: Own Funds main features

IssuerPublic or private placement
Instrument type
Amount recognised in regulatory capital (£’000, as at 31 December 2023)
Nominal amount of instrument
Issue price
Accounting classification
Existence of a dividend stopper

CT(EM)L
PrivateOrdinary shares
17,50017,500,000£1 eachCalled up share capitalNo

12Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

5.

Own Funds Requirement
CT(EM)L is required to disclose its Permanent Minimum Requirement, FOR and K-Factor Requirement
information in accordance with the provisions set out in MIFIDPRU 4.3.
In accordance with MIFIDPRU 4.3.2, CT(EM)L is required to hold Own Funds in excess of the greaterof:a) Permanent Minimum Requirement (“PMR”), which for the Company is £75,000; orb) Fixed Overheads Requirement (“FOR”) which amounts to 25% of its most recently audited
annual expenditure less permittable deductions; andc) K-Factor Requirement (“KFR”).
Table 6: Own Funds requirement

Own Funds requirement
A. Permanent Minimum Requirement
B. FORSum of K-AUM, K-CMH and K-ASA
Sum of K-COH and K-DTF
Sum of K-NPR, K-CMG, K-TCD and K-CON
C. Total K-Factor requirements
Own Funds Requirement (higher of A, B and C)

5.1

£’000
75
576
101
101
576

Permanent Minimum Requirement
PMR represents the minimum capital requirement, also referred to as the initial capital requirement. This isdetermined based on permissions for the type of investment activities undertaken. Initial capital is set at £75k
(for firms which provide execution, portfolio management, advisory services with no permission to hold clientmoney or securities), £150k (with any other MIFID activity including operating a multilateral trading facility),or £750k (who deal on own account or provide underwriting).
CT(EM)L does not trade on own account nor operate a multilateral trading facility and is therefore not subject
to £150k or £750k initial capital requirement.

5.2

Fixed Overheads Requirement
The FOR of a MIFIDPRU investment firm is an amount equal to one quarter of CT(EM)L’s relevant
expenditure during the preceding year from its most recent audited annual financial statements. Under
MIFIDPRU 4.5.3R(2), amongst other deductions from total expenditure, expenses can further be deducted
and deemed variable only if they are both non-recurring in nature and arising from non-ordinary activities. As
at 31 December 2023, CT(EM)L’s FOR was £576k which serves as its Own Funds requirement being thehigher of PMR, FOR and KFR.

5.3

K-Factor Requirement
KFR is calculated in accordance with MIFIDPRU 4.6 and is based upon investment services provided and
MIFID activities undertaken by CT(EM)L.
Three K-Factors are relevant for the CT(EM)L’s business model:▪

K-AUM (i.e., Asset Management Activity) is calculated based on the average AUM for its MIFID business(i.e., excluding Property and Infrastructure) over the previous 15 months (excluding the most recent threemonths) multiplied by a regulatory-defined coefficient of 0.02%;

The remaining K-Factors are not applicable to CT(EM)L’s business model as they are considered out of
scope (i.e. K-CMH, K-ASA, K-COH, K-DTF, K-NPR, K-CMG, K-TCD and K-CON) as CT(EM)L does not havea trading book.
5.4

Adequacy of Own Funds approach
As prescribed by MIFIDPRU 7.4.7 Overall Financial Adequacy Rule (“OFAR”) a firm must, at all times, hold
Own Funds and liquid assets which are adequate, both as to their amount and their quality, to ensure that:i.

CT(EM)L is able to remain financially viable throughout the economic cycle, with the ability to address
any material potential harm that may result from its ongoing activities; and13

Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

ii.

CT(EM)L’s business can be wound down in an orderly manner, minimising harm to consumers or toother market participants.

The Group prepares an ICARA annually or more frequently as required. The ICARA assesses whether theGroup and its subsidiaries including CT(EM)L hold adequate Own Funds required under MIFIDPRU 7.6.2R.
The ICARA ensures that the Group and its subsidiaries have appropriate systems and controls in place toidentify, monitor and, where proportionate, reduce all potential material harms that may result from:
A. ongoing operation of its business, andB. winding down its business.
The Own Funds Threshold Requirement (‘OFTR’) and LATR in addition to Basic Liquid Asset Requirement
is calculated as the higher of these two assessments as noted under A and B above and represents how
much additional capital or liquid assets may be necessary to address any potential residual impacts to comply
with the OFAR.
The Group performs independent assessment and employs other quantitative tools such as stress testingand scenario analysis for this purpose as part of the ICARA process. The Group’s allocation of Own Funds
Requirement to CT(EM)L assesses the potential harms that are applicable to clients, the market and the firm
through scenario-based assessment. Some examples of situations that may result in harms to clients include
trading error, mandate breach, misselling, failure of an outsourced service provider/vendor. Other examplesof harm to the firm include loss of significant clients, failure in IT infrastructure and poorly managed change.
CT(EM)L is a non-SNI firm and is not considered to be large enough to cause systemic disruption to themarket as a whole and is therefore unlikely to cause harm to the market.
The CT(EM)L Board ensures the OFTR and LATR identified through the ICARA process and wind-down plan
are appropriate and comply with the OFAR by regular monitoring of its capital and liquidity positions incomparison to the calculated threshold requirements.
CT(EM)L’s capital and liquidity positions are assessed on an on-going basis throughout the year and up-todate capital and liquidity requirements are reported to the FRMC and FORC on a monthly basis and to theCT(EM)L Board on a quarterly basis. This allows implementation of timely management actions as and whenappropriate to ensure continuing compliance, including updated assessments at least annually of thresholdrequirements to reflect emerging exposures and material changes in the business.

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Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

6.

Remuneration policy and procedures
Th FCA implemented its MiFIDPRU Remuneration Code with effect from 1 January 2022. Under theRemuneration Code, the Group, a non-SNI firm, must report annually on its remuneration governance, policy
and practice.

6.1

Approach and objectives of financial incentives
The overall objective of the remuneration policy is to promote the long-term interests of the Group, theircustomers and of Ameriprise Financial (the Group’s parent company), by attracting and retaining effective,
engaged and motivated talent and to discourage excessive and imprudent risk taking. The policy is constructedso as to encourage responsible business conduct, fair treatment of clients and address any potential conflictsof interest in the relationship with clients.

6.2

Decision-making process for remuneration policy
The Group has a Remuneration Committee which meets regularly to establish the Group’s remuneration
principles and oversee the governance of the remuneration programmes, policies and procedures. The
Remuneration Committee carries out its responsibilities within the authority delegated by the relevant Boards
and documented in its Terms of Reference. The responsibilities include approving the terms of the incentive
pools, long term incentive plans, and any other incentive arrangements, and the remuneration for senior level
employees, specifically reviewing all positions identified as Material Risk Takers including heads of Control
Functions.
The Remuneration Committee currently comprises three members who are either executives from Ameriprise
Financial, Inc., or non-executives, none of whom held executive positions with the UK based holding company
CTIUKIL for the year ending 31 December 2023.

6.3

Material Risk Taker Identification
Material Risk Takers ("MRT”) for the Group have been identified through an exercise that involved the mappingof risks and responsibilities, and consideration of other factors.
The Group defines its MRT in line with the definitions provided by SYSC 19G and associated guidance. Those
MRT are senior management, individuals with a material impact on the risk profile of the Group, individuals
within control functions and other employees whose total remuneration takes them into the same bracket as
senior management and risk takers, whose professional activities have a material impact on the risk profiles of
the Group or of the funds it manages.
For the calendar year 2023, there was a total of 28 MRT for Columbia Threadneedle (EM) Investments Ltd who
were employees of the Group for all or a portion of the year.

6.4

Components of remuneration
The Group makes a clear distinction between criteria for setting fixed and variable remuneration.
••

Fixed remuneration primarily comprises basic salary and allowances which reflect the professional
experience and organisational responsibility of staff and are permanent, pre-determined, non-revocable andnot dependent on performance.
Variable remuneration primarily comprises annual incentive payments made in respect of individual
performance.

Variable remuneration awards are discretionary and fully flexible, with the option to pay no incentive award if
required. Awards are made according to the individual employee’s performance against their Goals andLeadership scores, market remuneration levels for comparable roles, internal comparators and the funding
available to fund variable remuneration awards, further influenced by the employee’s adherence to, and deliveryof, the Company’s risk and regulatory compliance responsibilities.
Guaranteed variable remuneration awards are made only on an exceptional basis in the first year of service.
Severance payments are made at the firm’s discretion and are usually based on individual service and pay
levels. The firm will take into account the individual’s performance over time, and payment will not reward
failure or misconduct.

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Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

6.5

Determining Incentive Remuneration Pools
Pools are determined at the Group’s discretion, subject to final oversight and approval from the Remuneration
Committee. The pools for Real Estate, Distribution and Investments Special Incentive Plans (the “SIPs”) aredetermined with reference to four un-weighted factors being a ‘Top-Down’ assessment of market practice, legal
and regulatory requirements and any other internal or external contextual factors; a ‘Bottom-Up’ calculation
based on business performance against Plan and Target Incentive level for the firm; the overall financial andstrategic performance of the Group; and the financial and strategic performance of Ameriprise Financial as theGroup’s parent company and shareholder.
The bottom-up element of the SIP pool determination process measures team and wider business performanceagainst key business targets for each area of the Group, including longer-term investment performance for theInvestments and Real Estate divisions and a mix of gross and net sales for Distribution. Investment performanceis assessed against each fund’s benchmarks and its risk profile. All such assessments’ impacts on the bottomup calculation are capped, and weighted more heavily to longer time periods, so as not to incentivise managers
to take excessive risk in order to deliver higher incentive pools. While the Group and parent company financial
and strategic results are important factors in pool determination, the model is set up to ensure that delivery of
the business’ core goals, including delivering investment performance to its customers, is an explicit andsignificant driver in pool determination for those divisions.
The funding for support roles forms part of the global Annual Incentive Award (“AIA”) plan, with funding to eachregion and business determined by a comprehensive balanced Business Unit Assessment in context of theoverall Ameriprise Financial group’s performance. All pools are set in context of the risk and control environment
maintained during the year and may be adjusted top-down to reflect any material issues in that regard. The
Remuneration Committee also receives ongoing reports through the year from the Risk function regarding risk
assessments and any themes or areas of note related to risk control or risk-related behavioural concerns. In thecourse of reviewing the Company’s financial and non-financial performance for approval of funding forremuneration programmes, the Remuneration Committee will ensure that such approval does not adversely
impact the Company’s capital and liquidity position.
The Remuneration Committee takes all of these factors into account in order to make a balanced decision on
its oversight and approval of the incentive pools for the year in question.

6.6

Determining Individual Incentive Awards
Individual discretionary awards from the available funding, in context of market-competitive reward levels for thejob in question, are driven strongly by each individual’s ratings against Goals (objectives) and the Group’s
behavioural Leadership expectations (our Values), each of which is separately rated on a 5-point scale to ensure
the behavioural assessment is given due prominence. Goals focus on the key deliverables for the role that year,
in particular on the delivery of investment performance for Investments employees and for the Alternatives
division. Investment performance, where relevant to the role, is assessed against each fund’s benchmark andits risk profile.
Ratings are consistency-checked across the business and the EMEA Chief Risk Officer and the Head ofCompliance may provide input as required to ensure balance and due reflection of risk management. For Sales,
Real Estate and Investment incentives there is no pre-determined grid or formula driving awards, which are
discretionary in order to be able to account for and reflect all relevant factors.
The firm applies a risk adjustment policy to all employees and activities, and this includes performanceadjustment to both current awards and through malus and clawback to unvested and delivered awards at thediscretion of the Remuneration Committee. Cases are identified by the EMEA Chief Risk Officer who monitors
risk events throughout the year. Final oversight and decision-making on risk adjustment to awards rests with
the Remuneration Committee.

6.7

Delivery of Total Incentives
The Group considers that deferred awards for higher earners and risk-takers are a matter of good practice andan important part of aligning key staff’s interests with the long-term interests of customers and shareholders. To
that end, Total Incentive awards for all employees in the Group may be delivered partly in deferred awards
through the Ameriprise Financial Long-Term Incentive Award (“LTIA”) programme and, for MRT and those in

16

Columbia Threadneedle (EM) Investments Limited
MIFIDPRU 8 disclosure as at 31 December 2023

the Investments division, through a fund deferral programme. Deferrals, and delivery of awards in instruments,
will comply with relevant regulatory requirements in force from time to time. Staff qualifying as MRT and thoseof a comparable level of seniority may be subject to a higher rate of deferral. 50% of the overall incentive award
is delivered in fund-linked units subject to a holding period after delivery. The fund linked units are designed toreflect the performance of a cross section of products and asset classes within the region.
6.8

Quantitative Disclosure
The aggregate total remuneration for MRT for the period ending 31 December 2023 was £16.3m (of which£7.9m relates to Senior Management and £8.4m relates to Other Material Risk Takers).
Table 7: Quantitative Disclosures

Remuneration (£’m)

1

Senior Management

Other MRT

Other Staff

Total remuneration

Fixed remuneration

2.4

4.2

0.2

6.7

Variable remuneration

5.5

4.3

0.4

10.2

Total remuneration

7.9

8.41

0.6

16.9

Number of beneficiaries

6

22

8

36

There is a difference of £0.1m in the total due to rounding.

The Group did not award guaranteed variable remuneration awards to any Material Risk Takers during thefinancial year.
The Group awarded severance payments to two MRT during the financial year. Under MIFIDPRU 8.6.8R(7), theGroup is not disclosing the total amount of severance payment. This exemption is relied on to prevent individual
identification of a MRT. The relevant amounts are, however, included in the overall total variable remuneration
figures in the table above.
The highest severance payment awarded to an individual MRT during the financial year was £0.14m.

17