Firms are required under the Senior Management Arrangements, Systems and Controls (SYSC) manual of the Financial Conduct Authority Handbook to have in place robust governance arrangements and effective procedures which allow it to identify, manage, monitor and report the risks it is, or might be, exposed to.
Eden Park Investment Management Ltd is authorised and regulated by the Financial Conduct Authority and this disclosure sets out how the Firm complies with its obligations to identify, manage and mitigate risks.
The Capital Requirements Directive (‘CRD’) of the European Union created a regulatory capital framework across Europe governing how much capital financial services firms must retain. The rules are set out in the CRD under three pillars:
- Pillar 1 sets out the minimum capital resource requirement firms are required to maintain to meet credit, market and operational risks.
- Pillar 2 requires firms to assess firm-specific risks not covered by Pillar 1 and, where necessary, maintain additional capital.
- Pillar 3 requires firms to disclose information regarding their risk assessment process and capital resources with the aim to encourage market discipline by allowing market participants to assess key information on risk exposure and the risk assessment process.
The rules in the FCA Prudential Sourcebook for BIPRU sets out the requirements for a Pillar 3 disclosure. The document is designed to meet Eden Park Investment Management’s Pillar 3 Disclosure obligations.
2.1 Frequency and location of disclosure
Future disclosures will be issued on an annual basis once they have been reviewed and approved by the Directors.
The report and all future reports will be published on our Firm’s website.
2.2 Scope of disclosure
Eden Park Investment Management provides discretionary investment management services to customers categorised as Retail Clients and Professional Clients. The Firm is classified as a BIPRU Firm as it carries out the activity of portfolio management but does not provide safekeeping and administration of financial instruments.
3 Governance Arrangements - The Management Body
The Directors are responsible for the Firm’s risk management governance structure and how the Firm’s risk exposure must be managed in line with the Firm’s overall business objectives and within its stated risk appetite. This includes the governance of the process for identifying, evaluating, managing and reporting the significant risks faced by the Firm.
The Directors are ultimately responsible for ensuring that the Firm maintains sufficient capital and liquidity resources to meet its regulatory capital and liquidity requirements and to support its growth and strategic objectives. Risk management is embedded throughout the business, with the overall risk appetite and risk management strategy approved by the Directors propagated down throughout the business as appropriate.
4 Capital Adequacy and ICAAP
The Firm’s overall approach to assessing the adequacy of its internal capital is documented in the Internal Capital Adequacy Assessment Process (“ICAAP”).
The ICAAP process includes an assessment of all material risks faced by the Firm and the controls in place to identify, manage and mitigate these risks. The risks identified are stress-tested against various scenarios to determine the level of capital that needs to be held.
Where risks can be mitigated by capital, the Firm has adopted the CRD requirements for Pillar 1. Where the Directors consider that the Pillar 1 calculations do not adequately reflect the risk, additional capital is added on in Pillar 2.
Whilst the ICAAP is formally reviewed by the Directors once a year, risks are reviewed and the required capital is reviewed more frequently and will particularly do so if/when there is a planned change impacting risks and capital or when changes are expected in the business environment potentially impacting the ability to generate income.
4.1 Capital Resources
The Firm is a BIPRU firm because it manages individual portfolios and does not provide safekeeping and administration of financial instruments or deal in any instruments on its own account.
A BIPRU firm must maintain at all times capital resources equal to or in excess of the base requirement (€50K). The Pillar 1 capital requirement for a BIPRU firm is the higher of:
3. Fixed Overhead Requirement
The Firm must always maintain capital resources equal to, or in excess of, the Pillar 1 requirement. During the 12-month accounting period to 30th April 2021 the Company complied fully with all capital requirements and operated well within regulatory requirements. At the accounting reference date, the Firm held the following capital position:
|Ordinary share capital =||135|
|Retained Earnings =||94|
|Core Tier 1 Capital =||229|
|Tier 2 Capital =||0|
|Total Capital Resources =||229|
|Credit Risk Capital Requirement @ 8% =||4|
|Market Risk Capital Requirement @8% =||0|
|Fixed Overhead Requirement =||51|
|Base Capital Requirement =||43|
|Total Pillar 1 Requirement =||51|
|Total Pillar 2 Requirement =||0|
|Total Capital Requirement =||229|
|Surplus capital over minimum requirement =||178|
The Directors are therefore comfortable that the Firm is, and has been throughout the financial year, adequately capitalised for Pillar 1 purposes. The Directors are comfortable that this will ensure prudent capitalisation and cover for market downturns and other risks that may materialise in the short to medium term.
The Directors constantly monitor the performance of the Firm and capital adequacy is regularly assessed by them. The Firm will also monitor risks throughout the year and decide if additional capital should be held against them. Additional risks that supplement the Pillar 1 requirements are detailed below and, where necessary, additional capital will be provided.
5 Management of Risk Framework
5.1 Risk Profile
Eden Park Investment Management Ltd has identified the following core risk categories: Strategic, Credit Risk, Market Risk, Operational Risk, Liquidity Risk and Reputational Risk.
These risks are continually evolving and generally driven by changes to the market in which we operate;
- Eden Park Investment Management Ltd strategies, business objectives and business/ operating models
- Eden Park Investment Management Ltd will seek to generate positive returns through carefully considered risk taking and robust risk management. As such the effective management and control of both the upside of risk taking and its potential downside is a fundamental core competency of the Firm.
5.2 Risk Appetite
The Directors are responsible for setting the Firm’s risk appetite, defining the type and level of risk that the Firm is willing to accept in pursuit of its business objectives.
5.3 Risk Assessment Framework
The Directors are responsible for approving the Risk Assessment Framework which is used to ensure that the Firm has a comprehensive understanding of its risk profile, including both existing and emerging risks facing the Firm, and to enable it to assess the adequacy of its risk management in the context of the Firm’s risk appetite.
6 Remuneration Policy
Eden Park Investment Management Remuneration Policy complies with the Remuneration Code in relation to its size, nature, scope and complexity of our activities.
The Policy is aligned to the Firm’s business strategy, objectives, values and long-term interests in respect of performance and effective risk management in line with the Firm’s risk appetite.
Last updated: May 2021