This brief statement does not disclose all of the risks and other significant aspects of trading in futures and options. In light of the risks, you should undertake such transactions only if you understand the nature of the contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk. Trading in futures and options is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances.
1. Effect of Leverage or Gearing
Transactions in futures carry a high degree of risk. The amount of initial margin is small relative to the value of the futures contract so that transactions are "leveraged" or "geared." A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional funds deposited with the firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.
2. Risk-reducing orders or strategies
The placing of certain orders (e.g. "stop-loss" orders, where permitted under local law, or "stop-limit" orders) which are intended to limit losses to certain amounts may not be effective because market conditions may make it impossible to execute such orders. Strategies using combinations of positions, such as "spread" and "straddle" positions may be as risky as taking simple "long" or "short" positions.
3. Variable degree of risk
Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.
The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a future, the purchaser will acquire a futures position with associated liabilities for margin (see the section on futures above). If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium plus transaction costs. If you are contemplating purchasing deep-out-of the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.
Selling ("writing" or "granting") an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavorably. The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest. If the option is on a future, the seller will acquire a position in a future with associated liabilities for margin (see the section on Futures above). If the option is "covered" by the seller holding a corresponding position in the underlying interest or a future or another option, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.
Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.
Additional risks common to futures and options
4. Terms and conditions of contracts
You should ask the firm with which you deal about the terms and conditions of the specific futures or options which you are trading and associated obligations (e.g., the circumstances under which you may become obligated to make or take delivery of the underlying interest of a futures contract and, in respect to options, expiration dates and restrictions on the time for exercise). Under certain circumstances the specifications of outstanding contracts (including the exercise price of an option) may be modified by the exchange or clearing house to reflect changes in the underlying interest.
5. Suspension or restriction of trading and pricing relationships
Market conditions (e.g. illiquidity) and/or the operation of the rules of certain markets (e.g. the suspension of trading in any contract or contract month because of price limits or "circuit breakers") may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions. If you have sold options, this may increase the risk of loss. Further, normal pricing relationships between the underlying interest and the future, and the underlying interest and the option may not exist. This can occur when, for example, the futures contract underlying the option is subject to price limits while the option is not. The absence of an underlying reference price may make it difficult to judge fair value.
6. Deposited cash and property
You should familiarize yourself with the protections accorded money or other property you deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property which had been specifically identifiable as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.
7. Commission and other charges
Before you begin to trade, you should obtain a clear explanation of all commission, fees and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.
8. Transactions in other jurisdictions
Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such markets may be subject to regulation which may offer different or diminished investor protection. Before you trade you should inquire about any rules relevant to your particular transactions. Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should ask the firm with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.
9. Currency risks
The profit or loss in transactions in foreign currency denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.
10. Trading facilities
Most open-outcry and electronic trading facilities are supported by computer-based component systems for the order routing, execution, matching, registration or clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses may be subject to limits on liability imposed by the system provider, the market, the clearinghouse and/or member firms. Such limits may vary, you should ask the firm with which you deal for details in this respect.
11. Electronic trading
Trading on an electronic trading system may differ not only from trading in an open-outcry market but also from trading on other electronic trading systems. If you undertake transactions on an electronic trading system, you will be exposed to risks associated with the system including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to your instructions or is not executed at all.
12. Off-exchange transactions
In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions. The firm with which you deal may be acting as your counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a firm price or to assess the exposure to risk, For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.
MIFIDPRU 8.6 Remuneration Disclosure
1. Introduction
This remuneration disclosure is made in accordance with the requirements of MIFIDPRU 8.6 of the FCA Handbook, which applies to Small and Non-Interconnected (SNI) MIFIDPRU investment firms. Evolution Markets Limited (“Evo”) is an SNI firm operating as a wholesale broker specialising in energy and environmental products. This disclosure outlines our remuneration policies and practices as required under MIFIDPRU 8.6.2R.
The purpose of this disclosure is to provide transparency regarding how our remuneration framework promotes effective risk management, aligns with our business objectives, and complies with regulatory requirements.
2. Proportionality Approach
Given the size, nature, scale, and complexity of our activities, Evo applies the basic remuneration requirements under MIFIDPRU. As an SNI firm, we are not subject to the more detailed remuneration rules that apply to non-SNI firms, such as deferral requirements or the establishment of remuneration committees.
3. Governance Arrangements
The Board of Directors has ultimate responsibility for overseeing the firm’s remuneration framework. Due to the firm's size and structure, we do not maintain a dedicated remuneration committee. Instead, remuneration matters are reviewed periodically by the Board to ensure they are consistent with the firm’s business strategy, risk appetite, and regulatory obligations.
4. Remuneration Policy Objectives
The objectives of our remuneration policy are to: - Attract, motivate, and retain skilled employees necessary for the firm’s success.
- Align employee interests with those of the firm’s clients and long-term business goals.
- Promote sound and effective risk management practices.
- Ensure compliance with applicable legal and regulatory requirements.
- Discourage behaviours that can lead to misconduct and poor customer outcomes.
5. Remuneration Structure
Our remuneration structure is designed to be simple, transparent, and aligned with prudent risk management principles. It consists of the following components:
A. Fixed Remuneration
- Description: Fixed remuneration is based on the role, responsibilities, and experience of the employee, as well as market benchmarks.
- Purpose: Provides financial stability for employees and reflects their professional skills and contribution to the firm.
- Key Features: Includes base salary and, where applicable, benefits such as pensions and healthcare.
B. Variable Remuneration (Performance-Based)
- Description: Bonuses may be awarded based on individual performance, business unit performance, and the overall financial results of the firm.
- Performance Metrics: Consider both quantitative and qualitative factors, including revenue generation, client satisfaction, compliance with internal policies, and contribution to risk management.
- Risk Adjustment: Bonuses are subject to adjustment based on risk outcomes to discourage short-termism or excessive risk-taking.
C. Non-Cash Benefits
- Description: May include benefits such as private health insurance, professional development opportunities, and pension contributions.
- Purpose: To enhance employee well-being and support long-term retention.
6. Link Between Remuneration and Performance
The firm’s approach to variable remuneration is designed to reward sustainable performance over the long term. Key principles include: - Balanced Assessment: Performance is assessed against a mix of financial and non-financial criteria, including compliance with regulatory obligations and risk management effectiveness. - Risk Consideration: Performance that generates short-term gains but exposes the firm to long-term risks is not incentivised.
7. Alignment with Risk Management
Remuneration practices are structured to promote sound risk management:
- No Incentives for Excessive Risk-Taking: Variable remuneration does not encourage behaviours that could compromise the firm’s risk appetite.
- Compliance Considerations: Employees are evaluated on their adherence to compliance requirements, particularly regarding conduct risk, operational risk, and regulatory obligations.
- Risk Adjustments: The Board retains the discretion to reduce or withhold variable remuneration where there are concerns about risk management failures, policy violations or regulatory breaches.
8. Aggregate Quantitative Information (MIFIDPRU 8.6.4R)
For the financial year ending 31st December 2024, the aggregate remuneration paid to staff was as follows: - Total Number of Staff: 24 - Total Fixed Remuneration Paid: £3,082,201 - Total Variable Remuneration Paid: £5,411,279 - Total Remuneration: £8,493,480
9. Review and Updates
Evo’s remuneration policy is reviewed annually, or more frequently if there are material changes to the business, regulatory environment, or risk profile. The Board is responsible for ensuring that the policy remains effective and compliant with applicable regulations.
10. Approval
This disclosure has been reviewed and approved by the Board of Directors of Evolution Markets Ltd to ensure it is fair, clear, and not misleading.
11. Contact Information
For further information regarding this disclosure, please contact uklegal@evomarkets.com