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

The Directors and the Chief Financial Officer, who is also the compliance officer, (known as the “Board”) of the Firm who determine its business strategy and the risk appetite, have designed and implemented a risk management framework that recognizes the risks that the Firm faces. The Board also determines how those risks may be mitigated and assesses on an ongoing basis the controls and procedures necessary to manage those risks. The Board meets on a regular basis to discuss current projections for profitability, liquidity, regulatory capital management, business planning and risk management.

The Board manages the Firm’s risks through a framework of policies and procedures having regard to relevant laws, standards, principals and rules (including FSA principals and rules) with the aim of operating a defined and transparent risk management framework.  These policies and procedures are updated as required.

The Board has identified that business, operational, market and credit risks are the main areas of risk to which the Firm is exposed.  There is a regular review of these risks, the controls and other risk mitigation arrangements and assessment of their effectiveness.  Where the Board identifies material risks they model the financial impact of these risks as part of the business planning and capital management and conclude whether the amount of regulatory capital is sufficient.

The Firm has a small, yet effective, operational structure.  It carries no market risk, other than foreign exchange risk on its cash, accounts receivable and foreign exchange forward contracts (hedges) denominated in foreign currency, and credit risk from its cash counterparties as well as from its management and performance fees receivable from its clients.  The firm uses the standardized approach to market risk and the simplified standard approach to credit risk.  The Firm is subject to the Fixed Overhead Requirements and is not required to calculate an operational risk charge.

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

·         a base capital requirement of Euro 50,000;

·         the sum of market and credit risk requirements; and

·         the Fixed Overhead Requirement (“FOR”).

It is the Firms experience that its capital requirement normally consists of the FOR.

Having performed the ICAAP it is the Firm’s opinion that no additional capital is required in excess of its Pillar 1 capital requirement.