Pillar 3 Disclosure

OVERVIEW

Arnold, Stansby is a limited licence 125,000 euros firm. It is required to comply with the three pillars of the Capital Requirements Directive (CRD). These are:

  • Pillar 1 – Minimum capital required to meet the basic level set the Financial Conduct Authority (FCA).
  • Pillar 2 – We calculate what we require to maintain in addition to Pillar 1. This is to meet any additional risks. This is subject to review by the FCA.
  • Pillar 3 – This is to disclose key information about the firms risks, controls, capital and remuneration policy.

This document is produced to comply with the FCA rules relating to capital adequacy.

Pillar 3 is designed to improve market discipline and in this way it is complementary to Pillars 1 & 2.

Where a disclosure is deemed to be immaterial it will be omitted.

FREQUENCY OF DICLOSURE

The directors of the firm do not consider it necessary to make the Pillar 3 disclosure any more frequently than annually.

These disclosures are based on the position as at 31 March 2018.

CORPORATE STRUCTURE

The firm is wholly owned and controlled by Arnold Stansby Holdings Ltd which is registered in England. There are currently four directors all involved in the running of the business.

SCOPE OF APPLICATION

These disclosures are made to comply with FCA rules. The firm is an agency only broker dealing with retail clients.

The firm has no associate businesses or subsidiaries other than the nominee company.

RISK MANAGEMENT AND INTERNAL CAPITAL ADEQUACY

The directors are responsible for managing and monitoring all risks. Due to the small size of the firm it is not considered necessary to set up committees to oversee specific risk types.

The directors set the risk parameters for the firm. The Compliance Director ensures that these parameters are adhered to.

The firm uses mitigation techniques to reduce the need risk in certain areas where possible.

The directors will provide additional capital required for the firm and ensure this is adequate.

The directors monitor the financial performance of the firm. The internal auditor produces the financial information for the partners.

The Internal Capital Adequacy Assessment Process (ICAAP) is the firm’s assessment of the risk appetite of the business. The firm reviews this annually. This will be done more frequently if it is felt this is needed.

The FCA is able to set individual capital guidance but this has not happened to date.

The firm buys and sells securities for clients. It does not hold any positions in any stock or share. Money is only paid to a market counter party when delivery is made to the firm. No security is registered in the clients name until the firm has been paid. Cash or collateral may be held for clients prior to purchase or sale of securities. Settlement periods are kept to a minimum to reduce risk to other firms.

CAPITAL RESOURCES

The directors of the firm believe that due to the nature of the business the most suitable approach to ensure the firm has adequate capital resources is to add the figure calculated in Pillar 2 to the Pillar 1 requirement.

The Tier 1 capital of the firm as at 31st March 2018 was £398,000

Pillar 1

Pillar 1 capital requirement is calculated as the higher of the fixed overhead requirement (FOR) or the sum of credit and market risk. The FOR is £172000

The base capital resources requirement of the firm at 31st March 2018 is £109600

(The firm is a BIPRU 125000 euro limited licence firm £1 = Euro 1.14051)

Pillar 2

The firm has calculated a figure for Pillar 2 of £172000 as at 31st March 2018.

The directors of the firm look at all areas of risk to the firm and consider the above to be a prudent figure to be used.

Pillar 3

This requirement is to allow the risk to be considered by market participants and others. It focuses on the various risks and how these are mitigated.

COMMITTEES

All four directors form the various committees set up.

These include:

  • Remuneration committee (see below)
  • Audit committee
  • Client Money & Assets committee
  • Compliance committee

REMUNERATION POLICY STATEMENT

The firm has completed a Remuneration Policy Statement in accordance with the rules of the regulator. However, the firm has decided that it will not make any payments based on performance to any staff. Decisions regarding any change to this policy will be made by directors of the firm. The board will act as the Remuneration Committee. The policy statement will be made not less than annually

Completed by JW Stockton (Compliance Director) May 2018