Clarges Capital Limited

Clarges Capital Limited (“Clarges Capital”) is authorised and regulated by the Financial Services Authority (the “FSA”). Clarges Capital is categorised as a limited license firm by the FSA for capital purposes. Clarges Capital is not a member of a group and so is not required to prepare consolidated reporting for prudential purposes.

The Directors of Clarges Capital, who determine its business strategy and the risk appetite, have designed and implemented a risk management framework that recognises the risks that Clarges Capital faces. The Directors also determine how those risks may be mitigated and assess on an ongoing basis the controls and procedures necessary to manage those risks. The Directors meet on a regular basis to discuss current projections of profitability, liquidity, regulatory capital management business planning and risk management.

The Directors manage Clarges Capital’s risks through a framework of policies and procedures having regard to relevant laws, standards, principals and rules (including the FSA’s principals and rules) with the aim of operating a defined and transparent risk management framework. The policies and procedures are update as required.

The Directors have identified that business and operational risks are the main areas of risk to which Clarges Capital is exposed. There is a regular review of these risks, the controls and other risk mitigation arrangements and assessment of their effectiveness. Where the Directors identify a material risk, they model the financial impact of that risk, as part of the business planning and capital management processes, and conclude whether the amount of regulatory capital is sufficient.

Clarges Capital has a small but effective operational structure. It carries no market risk, other than foreign exchange risk on fees receivable from clients, or credit risk, other than fees receivable from clients. The firm uses a standardised approach to market risk and the simplified standard approach to credit risk. Clarges Capital is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk charge.

Being a limited license firm, Clarges Capital’s capital requirement is the greater of:-

1. Base Capital Requirement of €50.000.00; or
2. Sum of Market and Credit Risk Requirements; or
3. Fixed Overheard Requirement

The approach of Clarges Capital to assessing the adequacy of its internal capital to support current and future activities is contained in the ICAAP. This process includes an assessment of the specific risks to Clarges Capital and the internal controls in place to mitigate those risks. Having performed the ICAAP, it is the Directors opinion that no additional capital is required in excess of its Pillar 1 capital requirement.