Jefferies Financial : 2022 MIFIDPRU Regulatory Disclosures Report (11/30/2022)

ANNUAL MIFIDPRU DISCLOSURES REPORT

• FOR THE YEAR ENDED 30 NOVEMBER 2022

JEFFERIES INTERNATIONAL LIMITED

Jefferies International Limited

CONTENTS
1	OVERVIEW AND BASIS OF PREPARATION	3
	1.1	BUSINESS BACKGROUND	3
	1.2	SCOPE AND TRANSITIONAL PROVISIONS	3
	1.3	FREQUENCY OF PUBLICATION AND VERIFICATION	3
2	GOVERNANCE & RISK OVERSIGHT	3
	2.1	BOARD OF DIRECTORS	3
	2.2	RISK OVERSIGHT COMMITTEES AND INFORMATION FLOWS	4
3	RISK MANAGEMENT	6
	3.1	RISK MANAGEMENT OVERVIEW	6
	3.2	THREE LINES OF DEFENCE MODEL	6
	3.3	RISK MANAGEMENT DEPARTMENT	6
	3.4	PRINCIPAL RISKS	6
	3.5	PRINCIPAL RISKS MANAGEMENT	7
	3.6	RISK APPETITE FRAMEWORK	8
4	OWN FUNDS	9
5	OWN FUNDS REQUIREMENTS	10
	5.1	OWN FUNDS REQUIREMENTS	10
	5.2	OVERALL FINANCIAL ADEQUACY RULE	11
6	REMUNERATION	12
	6.1	REMUNERATION POLICY AND THE DECISION-MAKING PROCESS	12
	6.2	DESIGN CHARACTERISTICS OF THE REMUNERATION SYSTEM	12
	6.3	AGGREGATE QUANTITATIVE INFORMATION ON REMUNERATION	14

Jefferies International Limited

1 OVERVIEW AND BASIS OF PREPARATION

1.1 BUSINESS BACKGROUND

Jefferies International Limited (hereinafter also referred to as "JIL" or "the firm") is the UK incorporated subsidiary of Jefferies Financial Group Inc. ('Jefferies'). Jefferies is a full-service investment firm listed on the New York Stock Exchange.

On 1 November 2022, the firm's intermediate holding companies merged into Jefferies Financial Group Inc. primarily to streamline the reporting process to the Securities and Exchange Commission in the United States of America. As a result of the mergers, the firm is now a direct subsidiary of Jefferies Financial Group Inc..

The firm provides clients with capital markets and financial advisory services, institutional brokerage and securities research services. The firm provides research and trade execution in equities, fixed income and a full range of investment banking services including underwriting, merger and acquisition, restructuring and recapitalisation advisory services.

1.2 SCOPE AND TRANSITIONAL PROVISIONS

This Annual MIFIDPRU Disclosures report ('report') has been prepared to fulfil the regulatory disclosure requirements set out by the Financial Conduct Authority ('FCA') in the Prudential Sourcebook for MIFID Investment ('MIFIDPRU') Chapter 8. This report relates to the activities and position of JIL for the year ended 30 November 2022, which represents the end of the relevant financial accounting period.

The firm has adopted the transitional provisions under MIFIDPRU TP 12, for its first MIFIDPRU 8 disclosures report, for the year ended 30 November 2022, as the Investment Firms Prudential Regime was implemented on 1 January 2022. Under TP 12, the firm is not required to disclose MIFIDPRU 8.7 Investment Policy.

The scope of this report relates primarily to the firm's governance arrangements, own funds, own funds requirements and remuneration policy and practices for the year ended 30 November 2022. A high level overview of the firm's Risk Management Framework is included in this report. Disclosures on risk management objectives and policies are covered in Section 3 of this report and also the Annual Report and Financial Statements published on Jefferies' corporate website https://ir.jefferies.com/resources/regulatory-information/default.aspx.

1.3 FREQUENCY OF PUBLICATION AND VERIFICATION

This report is published annually, concurrently with the Annual Report and Financial Statements, in accordance with the regulatory guidelines and is available on Jefferies' corporate website https://ir.jefferies.com/resources/regulatory- information/default.aspx.

This report was validated, reviewed and approved internally by senior management and the Board of Directors. This report is not required to be subject to independent external audit, except where data is equivalent to that included in the Annual Report and Financial Statements. Such data has been subjected to external audit in line with the verification process of the Annual Report and Financial Statements process.

2 GOVERNANCE & RISK OVERSIGHT

2.1 BOARD OF DIRECTORS

2.1.1 BOARD AND DIRECTORSHIPS

The Board of Directors of the firm is responsible for the long-term success of the firm by creating sustainable value for the firm's sole shareholder, Jefferies Financial Group Inc., whilst safeguarding Jefferies' name, reputation and credit rating. Figure 1 shows the number of directorships held by members of the JIL Board ('the Board'). The Board sets the firm's strategy, in line with delegated authority from the shareholder, and oversees its implementation through the approved Business Plans ensuring that those are pursued within the Board-approved Risk Appetite.

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Figure 1: JIL Number of Directorships Held by Members of the JIL Board for the year ended 30 November 2022

	Directorships
Name	Executive	Non-Executive
Huw Tucker	1	0
Joel Maryles	0	1
Jacob Katz	0	1
Linda Adamany*	0	4
Mahnaz Safa	0	3
Nicholas Williams	0	2
Peter Forlenza**	1	2

• Linda Adamany was appointed a Director of Vitesse Energy, Inc. post year end, effective 13 January 2023.
• Peter Forlenza resigned from the Board on 30 November 2022.

In accordance with the FCA Handbook (SYSC): (1) Directorships within the firm and its parent undertakings are counted as a single directorship; and (2) Directorships in organisations which do not pursue predominantly commercial objectives are not included.

2.1.2 BOARD RECRUITMENT

Recruitment for, and appointment of, a member of the Board combines an assessment of technical capability and knowledge base as well as competency skills. The Nominations Committee formalises the process for the appointment of new Board members by identifying and recommending for approval, by the Board, candidates to fill Board vacancies having evaluated the balance of knowledge, skills, diversity (including gender) and experience of the Board. When recruiting members to the Board, the Committee considers a broad set of qualities and competencies and assesses the time commitment required.

Board recruitment is subject to the approval of the Board. As part of the formal Director appointment process, Jefferies undertakes a number of additional checks, coordinated through the Human Resources Department, which include but are not limited to criminal record searches; a financial probity search; a UK directorship check; a sanction list check; an electoral register check; FCA/PRA Register search; and employment reference checks. Regulatory approval is co-ordinated through the Head of Compliance EMEA. The Nominations Committee has oversight of the induction process for new Directors and the on-going training and development of all Board members.

2.1.3 BOARD DIVERSITY

Jefferies is committed to promoting a diverse workplace, and approaches diversity in the broadest sense, recognising that successful businesses embrace diversity at all levels. Diversity, Equity and Inclusion are a foundation of our firmwide culture, and we also believe that companies with diverse Board of Directors are better positioned for stronger performance and improved governance. As part of its duties, the Nominations Committee is responsible for considering a broad set of qualities, skills and competencies when recruiting members to the Board and for that purpose consider the diversity of the Board. The Nominations Committee will also periodically assess the structure, size and composition, including diversity, of the Board, and make recommendations to the Board with regard to any changes. The Board is 33% gender diverse and its independent directors are 40% gender diverse.

Diversity, Equity and Inclusion (DEI) considerations are a top priority for Jefferies evidenced by the establishment of a dedicated Jefferies Environment, Social, and Governance (ESG) and DEI Committee reporting directly to the Jefferies Financial Group Inc. Board. The firm is well represented in the discussions and planning in this area with two of its non- executive directors being members of the Jefferies ESG and DEI Committee. In addition, on 19 January 2023, the Board appointed Mahnaz Safa as the JIL DEI Champion.

Refer to Jefferies' corporate website for information on DEI https://jefferies.com/DiversityAndInclusion/Diversity-and- Inclusion/2/2797.

2.2 RISK OVERSIGHT COMMITTEES AND INFORMATION FLOWS

The Board requires that Senior Management including the executive members of the Board, business heads and heads of control functions, take an active role in the risk management process and require business and support functions to assist in the identification, assessment and control of all risks.

The Board has set up a hierarchy of Board and Executive Management Committees and Sub-Committees, collectively the 'Risk Oversight Committees', with the objective of ensuring an effective risk governance structure. The Board approves the Terms of Reference of each of the Board Committees and Executive Management Committees. In addition to delegating, the Board reserve certain matters to themselves as set out in the Board Charter. This arrangement enables the Board to:

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• Interact effectively with the executive team which is charged with delivering the Group's agreed strategy whilst effectively managing the risks;
• Establish a robust control framework to manage risk effectively across the businesses, whilst allowing effective challenge, oversight and decision making;
• Benefit from the work of dedicated committees focused on important risk areas;
• Receive management information on compliance with the Risk Appetite; and
• Ensure clear escalation procedures are in place to enable effective decision making and risk management.

Figure 2: Board and Executive Management Committees

Jefferies International Limited

Board

Board

Committees

Executive Management Committees

Nominations Committee

Audit Committee

Operating Committee

Board Risk Committee

Risk

Management

Committee

Remuneration Committee

Conduct Risk Committee

Through the Risk Management Framework, the Board requires a comprehensive and integrated view of risk and risk management and the use of a common risk language and taxonomy across the firm. They also approve the standardised form, frequency and content of the risk information they require to be presented to Board meetings.

2.2.1 BOARD COMMITTEES

The members of each of the Board Committees are all non-executive directors. In 2022 the Board Risk Committee met 6 times, the Audit Committee met 5 times and each of the Remuneration Committee and Nominations Committee met 4 times.

• Board Risk Committee -The Committee reviews management information on the risk profile of the firm and recommends the risk appetite statements to the Board.
• Audit Committee -The Committee assesses and provides oversight on regulatory matters, reviews disclosures, significant financial reporting issues and material information in annual reports. It evaluates external and internal auditors, reviews the management letter and response, approves the annual audit plan and reviews the adequacy of internal controls.
• Nominations Committee - The Committee is responsible for identifying and recommending for approval, by the Board, candidates to fill Board vacancies, having evaluated the balance of knowledge, skills, diversity and experience of the Board.
• Remuneration Committee - The Committee is responsible for ensuring the firm's annual Remuneration Policy Statement and remuneration structures comply with the relevant regulations (see Section 6 for more details).

2.2.2 EXECUTIVE MANAGEMENT COMMITTEES

Executive Management Committees meet more frequently, typically at least monthly. The Committees oversee specialised areas and escalate significant issues to the Board Committees and the Board accordingly.

The firm's Executive Management Committees include:

• Risk Management Committee - supports the Board in the development of the Risk Appetite Statements for Principal Risks. Responsible for oversight of the risk profile and limit framework across the firm including all business lines in line with the Board-approved risk appetite.
• Operating Committee - is the key forum for coordination and communication between the corporate/control functions together with the management of operational risk across the business and it reviews operational risk events, key risk indicators and any other operating issues.

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