Policy clause
"No more than 10% in any single security": how to write it, test it and evidence it
A single-security limit caps each instrument, not each issuer, so a company's shares and bonds are measured separately. The test needs the denominator, a rule for one security held in several accounts and any carve-outs. Acclimetry measures it with the concentration template on the instrument dimension, adding every line of one instrument together.
No single security may exceed 10% of the value of the portfolio.
Questions to settle before it can be tested
- Security or issuer: a company's shares and bonds are two securities. If the concern is the company, add an issuer limit.
- One security, several lines: an instrument held in two custody accounts is one security, and lines with the same instrument key are added.
- Funds and cash: a pooled fund or money-market fund is a security too. Without a carve-out it is capped at 10% like any share.
- Timing: every run tests current holdings, so a rally can breach the cap without a trade.
As a testable rule
Concentration template, dimension instrument: each instrument's market value over the net market value of the measured positions. Hard maximum 10%, warning maximum 9%, tolerance zero. Exempt holdings are left out of the measured population, which takes them out of the denominator too.
A testable wording
No single security, counting all holdings of one instrument across accounts, may exceed 10% of the portfolio's market value. UK government bonds and authorised funds are excluded.
Pair it with an issuer limit if the concern is the company. For UCITS funds, see the 5/10/40 rule.
Worked example
Two custody lines of one Orchard Foods share total 10.5% of the 5m book; without carve-outs, gilts and funds exceed 10% too.
Rule template:concentration dimension: asset
Bounds: warn max 9% · hard max 10%
| Holding | Issuer | Class | Market value |
|---|---|---|---|
| Orchard Foods plc ordinary shares | Orchard Foods plc | Equities | 325,000 |
| Orchard Foods plc ordinary shares | Orchard Foods plc | Equities | 200,000 |
| UK Treasury 4% 2030 | HM Treasury | Government bonds | 900,000 |
| UK Treasury 4.5% 2034 | HM Treasury | Government bonds | 700,000 |
| Global equity fund | Global equity fund | Funds | 1,500,000 |
| Corporate bond fund | Corporate bond fund | Funds | 800,000 |
| Northwind Energy plc ordinary shares | Northwind Energy plc | Equities | 400,000 |
| Cash at custodian | Custodian bank | Cash | 175,000 |
| Group | Status | Value | Bounds | Headroom to the hard bound | Code |
|---|---|---|---|---|---|
| Orchard Foods plc ordinary shares | Breach | 10.5% | ≤ 10% warning ≤ 9% | -0.5% -1.5% to warning | ABOVE_HARD_MAXIMUM |
| UK Treasury 4% 2030 | Breach | 18% | ≤ 10% warning ≤ 9% | -8% -9% to warning | ABOVE_HARD_MAXIMUM |
| UK Treasury 4.5% 2034 | Breach | 14% | ≤ 10% warning ≤ 9% | -4% -5% to warning | ABOVE_HARD_MAXIMUM |
| Global equity fund | Breach | 30% | ≤ 10% warning ≤ 9% | -20% -21% to warning | ABOVE_HARD_MAXIMUM |
| Corporate bond fund | Breach | 16% | ≤ 10% warning ≤ 9% | -6% -7% to warning | ABOVE_HARD_MAXIMUM |
| Northwind Energy plc ordinary shares | Compliant | 8% | ≤ 10% warning ≤ 9% | 2% 1% to warning | WITHIN_LIMITS |
| Cash at custodian | Compliant | 3.5% | ≤ 10% warning ≤ 9% | 6.5% 5.5% to warning | WITHIN_LIMITS |
ABOVE_HARD_MAXIMUM: The measured value exceeds the approved hard maximum, beyond any stated tolerance.WITHIN_LIMITS: The measured value sits inside every approved bound.
Largest contributors: Orchard Foods plc ordinary shares → Orchard Foods plc ordinary shares 6.5%, Orchard Foods plc ordinary shares 4% · UK Treasury 4% 2030 → UK Treasury 4% 2030 18% · UK Treasury 4.5% 2034 → UK Treasury 4.5% 2034 14%
Computed at build time by the Acclimetry rule engine (backend commit 8197063); the same code runs in the product.
What each monitoring run records
Each run stores, per instrument, the state, reason code, weight, headroom and contributing lines. A breach opens or updates a case recording first and last seen, peak value and root cause, such as market movement or a trade. Waivers sit on the case and never change the result.