PILLAR 3 DISCLOSURE

Introduction:

The requirements of the Senior Management Arrangements Systems and Controls (SYSC) manual of the Financial Conduct Authority require us to have in place robust governance arrangements and effective procedures to allow us to identify, monitor and report the risks we are or may be exposed to.

GPIM Limited is authorised and regulated by the Financial Conduct Authority and this document produced by the Board of GPIM Limited lays out the manner in which GPIM Limited complies with those obligations.

The board will update these requirements on an annual basis, once the accounts have been audited and published, should circumstances warrant a more frequent approach may be adopted.

The company intends to make Pillar 3 disclosures via its website.

Overview:

The Capital requirements Directive (CRD) creates a regulatory framework across Europe governing the minimum capital requirements of firms. These rules are known under the CRD as 3 pillars

  • Pillar 1; the minimum capital requirement firms are required to maintain to meet credit, market and operational risks
  • Pillar 2; the firms assessment of its pillar 1 capital requirements adequacy to meet its risks and is subject to annual review by the FCA and
  • Pillar 3; requires disclosure of specific information about the underlying risk management controls and capital requirements

The FCA rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to satisfy the Pillar 3 obligations.

The FCA rules permit a firm to omit some required disclosures if they believe that the information is immaterial, such that omission would be likely to change or influence the decision of a reader relying on that information.

Additionally, the firm may omit required disclosures where they believe that the information is regarded as proprietary or confidential. Proprietary information is that which, if it were shared, would disadvantage our competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and or counterparties.

GPIM Limited has not made any omissions on these grounds.

Capital Resources:

The Firm is categorised as a Prudential category P3 and has been authorised as a BIPRU €50,000 firm.

GPIM Limited is an investment management firm and as such has no trading book exposures.

GPIM Limited is not a financial holding company as defined by FCA regulations and as such is not required to provide consolidated reporting for prudential purposes.

The Firm is governed by its Directors who are involved in the day to day management of the business and also determine its business strategy and risk appetite. They are also responsible for establishing and maintaining the Firm’s governance arrangements along with designing and implementing a risk management framework that recognises the risks inherent in the business. The Directors also determine how the identified risks may be mitigated and perform an ongoing assessment of the arrangements to manage those risks.

The Directors hold regular meetings at which current projections for profitability, cash flow, regulatory capital management, and business planning and risk management are discussed.

The Directors manage the Firm’s business though a framework of policy and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.

Risk Profile:

The Directors have identified that business, operational, market and credit risks are the main areas of risk to which the Firm is exposed. Annually the Directors formally review their risks, controls and other risk mitigation arrangements and carry out an assessment of their effectiveness. Where the Directors identify material risks, they consider the financial impact of these risks as part of their business planning and capital management and conclude whether the amount of regulatory capital is adequate.

GPIM has a straightforward operational infrastructure. Its market risk is limited to credit risk on its accounts receivable and from management and fees receivable from the funds under its management. The Firm settles all its transactions on a Model B basis and as such once contracted has no market exposure. The Firm is subject to the Fixed Overhead Requirement (‘FOR’).

The firm is a limited licence firm and as such its capital requirements are the greater of:

  • Its base capital requirement of €50,000; or
  • Its Fixed Overhead Requirement

The Directors have identified credit risk exposure as the main element of our risk exposure, however procedures mitigate this risk levels that they believe are immaterial in the context of our business.

Fixed Overhead Requirement (FOR):

The Directors believe that the FOR adequately defines its capital requirements and hence market and credit risks are considered to be immaterial. Our capital requirements are currently £320,000 which is well within the level of regulatory capital held as of 30 June 2018 of £557,656.

We consider this amount to be sufficient regulatory capital to support the business and with the exception of credit risk which is considered immaterial have not identified any areas which give rise to a requirement to hold additional risk based capital.

ICAAP:

The Firm undertakes additional risk assessment as part of its Pillar 2 obligations. The potential financial liabilities are reflected in its ICAAP report recently approved by the Board and which is due to be updated in June 2019.

The value of the securities and the income derived from them can fall as well as rise. Investors may not get back their initial investment. Past performance is not a reliable indicator of future performance and the amount realised may be less than the original investment made. Any estimates of future performance are based on assumptions that may not be realised. Any securities denominated in foreign currencies may see their value fall as a result of exchange rate movements. Market conditions may impact the liquidity and volatility of the securities and accordingly an investor may find it difficult to realise an investment.