Asset Intelligence Portfolio Management Limited (the “Company”) was incorporated in England and Wales on 20 April 2019 and is authorised and regulated by the Financial Conduct Authority (the “FCA”). The Company acts as an investment manager to collective investment schemes (“the Funds”).
The Company is categorised as a limited licence firm by the FCA for capital purposes.
Pillar 3 disclosure fulfils the Company’s obligation to disclose to market participants key pieces of information on a company’s capital, risk exposures and risk assessment processes.
I. RISK MANAGEMENT OBJECTIVES AND POLICIES
The Directors of the Company determine its business strategy and the risk appetite. The Directors (including the Compliance Director) have designed and implemented a risk management framework that recognises the risks that the business faces. The framework considers how those risks may be mitigated and assesses the controls and procedures in place to manage those risks. The Directors meet on a regular basis and discuss projections for profitability, liquidity, regulatory capital, business planning and risk management.
As an investment manager, the Company considers the following as key risks to its business:
Business risk – This risk represents a fall in assets under management in the Funds or the loss of key staff which may reduce the fee income earned by the Company and hinder its ability to finance its operations and reimburse its expenses.
Operational risk – This risk covers a range of operational exposures from risk of trading errors to risk of breach of a Fund’s investment objectives. Legal and reputational risks are also included within the category of operational risk.
Credit risk – This risk relates to the exposure to the Funds for non-payment of management and performance fees and counterparty exposure relating to the Company’s bank balances and any other debtors.
Market risk -The risk is the exposure to foreign exchange fluctuations due to investment management and performance fees being denominated in currencies other than sterling.
The above risks are assessed and mitigated as part of the Internal Capital Adequacy Assessment Process (“ICAAP”).
II. CAPITAL RESOURCES
The capital resources of the business comprise Tier 1 capital with no deductions.
As a limited licence firm the capital resources requirement is calculated by reference to assessment of the Financial Conduct Authority (FCA) Pillar 1 and Pillar 2 requirements.
Pillar 1 capital is the greatest of:
1. a base capital requirement of Euro €50,000;
2. the sum of market and credit risk requirements; and
3. the Fixed Overhead Requirement (“FOR”).
Pillar 2 capital is calculated by the Company as representing any additional capital to be maintained against any risks not adequately covered under the requirement in Pillar 1 as part of its ICAAP.
As at the 21st November 2019 the Company’s regulatory capital position was:
Tier 1 Capital: £50,154.36
Total Capital Resources Requirement: £42,819.22
III. MANAGEMENT OF THE ICAAP
The approach of the Company 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 the Company and the internal controls in place to mitigate those risks. Finally, an assessment is made of the probability of occurrence and the potential impact, in order to arrive at a level of required capital, as relevant. The Company stress tests its forecasts by considering the impact of losing assets under management, its breakeven point, and in order to address the worst case scenario, the costs to close.
The Company’s ICAAP is formally reviewed by the Directors approximately every 6 months, but will be revised should there be any material changes to the Company’s business or risk profile.