Horizon Asset LLP (the “Company”):
Pillar 3 Disclosure Document

General Disclaimer

Horizon Asset LLP (the “Firm”) is authorised and regulated by the Financial Conduct Authority (the “FCA”). The products and services of Horizon Asset LLP carry a high degree of risk and are only available to Eligible Counterparties and Professional Clients as those terms are defined by the rules of the FCA.

Nothing in this document is intended to be a solicitation for services or investments in any fund which we advise.

All information herein is provided as at 31 December 2020.


1       Introduction

Basel II comprises 3 “pillars” which are minimum capital requirements, supervisory review and market discipline. Taking these in more detail: 

  • Pillar 1 sets out the mechanism for calculating the minimum regulatory capital covering the three major components of risk i.e. credit risk, market risk and operational risk;


  • Pillar 2 deals with the regulatory response to the first pillar and provides a framework for dealing with other risks not captured under pillar 1. In part, it requires the Firm to assess whether its Pillar 1 capital is adequate to meet the risks it faces. As required by the rules of the FCA the Firm addresses these matters in its internal ICAAP process;


  • Pillar 3 is designed to increase the transparency about the underlying risk management controls and capital position of the Firm.


Within the FCA handbook BIPRU 11 sets out the provisions for Pillar 3 disclosure and this document has been prepared in accordance with those rules to meet our Pillar 3 obligations. The disclosure is verified by the Firm’s members. Unless otherwise stated, all figures are as at 31 December 2020.

We are permitted to omit required disclosures if we believe that the information is immaterial such that its omission would be unlikely to change or influence the decision of a reader. 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 also 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 of immateriality or proprietary information.


2        Risk Management and Corporate Governance

The Firm’s members as at 31 December 2020 were:

Sherif Nadar,

Nobuyuki Teranaka

Alan Zeigler 

Shigeru Myojin

Susan Richards (*)

Horizon Asset (UK) Limited (*)

David Gu

(*) Designated members


The corporate member, Horizon Asset (UK) Limited, is a wholly owned subsidiary of Horizon Asset Holdings Limited.

The Firm is governed by its Management Committee and by its corporate member which work with senior members of staff in setting, implementing and reviewing the corporate governance and risk management framework. Collectively they have determined that challenging return environment for equity long short remains the primary risk though volatility and macro effects from the ongoing pandemic and associated policy responses are also an area of key focus the are the main areas of risk to which the Firm may be exposed.

These risks are reviewed regularly as part of the Firm’s own ICAAP process.


3          Regulatory Capital Resources

The regulatory capital, as reflected in the Firm’s audited financial statements, comprise partners’ capital.




Tier 1 capital


Tier 2 capital

Tier 3 capital

Total Capital Resources


There are no deductions required from Tier 1 or Tier 2 capital.


4          Required Capital considerations

The Firm is a Collective Portfolio Management Investment (CPMI) firm which is not permitted to (i) provide safekeeping services; (ii) hold client assets/client money; or (iii) place financial instruments on a basis without a firm commitment. Accordingly the Firm is categorized as BIPRU firm under the rules set out in IPRUINV of the FCA handbook.

As a BIPRU firm following IPRU INV  the Firm is required to maintain, at all times, own funds in excess of the highest of A B or C where:

A is defined as Funds under Management Requirement (which includes a base own funds requirement of 125,000 Euros) plus Professional Negligence Requirement

B is defined as Fixed Overheads Requirement plus Professional Negligence Requirement


C is defined as Market Risk Requirement plus Credit Risk Requirement in respect of the Firm’s MiFID business only


Funds under management requirement

This is calculated as 0.02% of the amounts by which the funds under management exceed 250,000,000 Euros plus the base own funds requirement.


Fixed Overheads Requirement

This is typically calculated as 25% of annual recurring expenses


Professional Negligence Requirement

The Firm has elected not to rely on the third-party professional indemnity insurance which it has taken for the purposes of its capital calculations. Accordingly, the professional negligence requirement is calculated as 0.01% of the value of portfolios of Alternative Investment Funds (AIFs) managed.


Market and Credit risks

The Firm is not allowed to hold customer assets, client money or take proprietary positions in respect of our MiFID business.  This means that our market risk is limited to foreign exchange risk on amounts receivable in foreign currency while credit risk relates principally to the management and performance fees, if any, receivable from the funds which we advise and on the cash deposits which we hold with regulated financial institutions.  

The Firm follows the standardised approach to market risk and the simplified approach to credit risk as set out in the FCA rulebook.

With respect to credit risks arising on the fees receivable under our investment management agreements the risks that we face reflect the credit risks of the funds themselves. 

As part of our normal investment management process we monitor the credit risks to which the funds are exposed and assess the credit worthiness of the counterparties and custodians. We perform full daily reconciliations of all cash and securities positions to the independent prime brokers and custodians retained by each fund. Moreover, this process is replicated independently by each fund administrator.  This ensures that we are able to monitor the level of the funds’ exposure to each counterparty and respond as necessary to any changes in circumstances. We will continue to review best practice in this area but believe that retaining multiple prime brokers and custodians for the funds coupled with a liquid trading style and no reliance on fixed term funding remains the most effective option for risk mitigation in this area. Therefore, we believe that no additional capital is required to protect against credit risk.



Given our trading strategy and the levels of leverage deployed by the Firm we believe that the Fixed Overhead Requirement is likely to remain the appropriate basis on which to calculate the core capital for the Firm. However, we also acknowledge that recent redemptions have impacted our operating model and the principals therefore elected to increase the capital of the Firm at the end of 2020 to support the Firm’s operations during 2021.


5          Risk management 

The Firm’s senior managers are responsible for determining both the business strategy and the overall risk appetite. They are also responsible for ensuring appropriate corporate governance arrangements are in place and for implementing a risk management framework which is compliant with regulatory requirements and the Firm’s risk appetite.

The main areas of risk which have been identified are summarized below.


External risk factors

The senior managers are responsible for monitoring the external environment and identifying issues or concerns. Among the areas that are under review at present are investor preferences and changing allocations notably in the light of more muted performance by the Firm over recent years, possible shocks  as the next phase of the Covid-19 pandemic unfolds in various regions, and shifting macro factors impacting comparative economic security and growth prospects in differing regions.



The Firm continues to monitor upcoming changes and evolving best practice.


Market and Credit risks

The Firm’s direct exposure to market risk is confined to receivables or cash balances held in foreign currencies while its exposure to credit risk is confined to receivables or cash balances.


Pension obligation risk

The Firm uses an external provider to operate a defined contribution pension scheme for its staff.


Interest rate risk

The Firm does not consider this to be a significant risk given the profile of its activities.


6        Remuneration Disclosure

The guiding principles for remuneration within the UK and for our affiliated entities in other locations are designed to reflect both individual performance and the performance of our companies. 

Our Firm’s performance is, in turn, inextricably linked to our ability to generate returns for our investors within the risk parameters that they expect. As outlined elsewhere in our documentation, and in our presentations to investors, our trading style is focused on liquid listed instruments which can be easily valued by the respective independent administrators. The fact that there is so little scope for subjectivity in the valuation coupled with the very liquid nature of the portfolio as a whole reduces the risks and challenges in calculating performance.

When considering the value to the business and to our franchise we seek to take a long term approach. However, given our legal structure, the nature of our trading strategies and the established history behind the senior management team we do not currently employ deferral as a significant part of our remuneration strategy.

When considering the performance of staff and the appropriate remuneration levels we take account of the roles performed, the challenges presented by both the role and the market environment impacting that role. For trading staff the most direct metric which is used is based on their individual trading performance subject to both audit sign off and adjustment by senior management to reflect level of risk taken, costs incurred, market conditions or other factors as applicable. Non trading staff are judged on objective criteria where available but generally more subjective criteria are deployed reflecting the nature of their specific role.

Globally we have a concept of a partnership to which senior staff (both trading and non trading) may be admitted allowing those senior staff to participate in a profit share for the group as a whole. Partners are not typically paid any profit share until external audits have been completed on the underlying funds.

Senior line managers (typically themselves partners) are responsible for proposing remuneration levels for other members of staff. The initial proposals are then subject to review and sign off by the partners and ultimately by the principals of the Firm. Given the size of the organisation we feel that this approach works well and do not feel that a formal remuneration committee is required.

It is considered that Horizon satisfies the criteria to be treated as a firm that is not significant in terms of its size and so we make this disclosure in a manner that is appropriate to our size, internal organisation and the complexity of activities undertaken.

The total remuneration paid to code staff in 2020 was £0.645 million.