Pillar 3 Disclosure
List of Contents
- Overview/Background to Disclosure
- Frequency of Disclosure
- Location and Verification
- Risk Management
- Capital Adequacy
1. Overview/Background to Disclosure
The disclosures contained in this document are made in order to fulfill ICM Capital's regulatory requirements. It is prepared and published so that we comply with FSA Rules and Regulations anticipated to the implementation of the European Union's Capital Requirements Directive (CRD). The CRD is intended to introduce the Basel II accord and is for the initiate a supervisory framework for capital measurement and capital standards across the EU Member states.
The Directive is made up from 3 distinct pillars:
Pillar 1: Minimum Capital Requirements
Pillar 2: Supervisory Review
Pillar 3: Market Discipline
The rules which govern the implementation of Pillar 3 are contained in BIPRU 11 section of the FSA Handbook. This document contains the disclosures which ICM Capital must make under these regulations.
2. Frequency of Disclosure
ICM Capital Ltd (the 'Company') will make its Pillar 3 Disclosure on an annual basis. If there is a material change in the approaches or permissions used to calculate regulatory capital then ICM Capital will make a pillar 3 disclosure in order to reflect these material changes.
Disclosure will normally be made as soon as is feasible after the completion of ICM Capitals annual financial Statements.
3. Location and Verification
The Disclosures made in this document have been reviewed by the Board of Directors and compiled for publication by the Compliance Department of ICM Capital Ltd. They will be made available for the public via the ICM Capital website. This Disclosure is not subject to external audit.
The disclosures made in this document relate to the business activities of ICM Capital Ltd.
During the reporting period ICM Capital offered execution only online trading in Foreign Exchange (FOREX) and CFD Contracts on Oil (WTI & Brent), Indices, Silver and Gold and other derivative products.
5. Risk Management
The Board at ICM Capital Ltd is responsible for monitoring and controlling financial risk management.
These responsibilities include:
- Defining the Risk Appetite of ICM Capital
- Reviewing the relevant Management Information in order to mitigate and manage ICM Capital s risk positions
- Structuring the Risk Management policies for ICM Capital
- Review of the Risk Register
There are several aspects of the Risk Management framework to which ICM Capital must pay specific attention to in order to manage and control the risks associated with the carrying on of the business.
In 2011 ICM Capital was an agent of London Capital Group and therefore had no direct exposure to Market Risk.
Due to the nature of the business the Company is exposed to currency risk i.e. the company is exposed to risks associated with the rising and falling prices of currency in relation to clients open positions. This is monitored and liabilities and assets across the currencies on offer are matched. This is to make sure that ICM Capital has dedicated adequate resources to cover as and when the currency rate falls.
Credit Risk is the risk associated with Clients of ICM Capital failing to pay any monies owed and due.
ICM Capital exercises all of its trades through a white label platform via MT4 dealing Platform. Client positions are closely monitored and closed out once the clients' initial deposit is eroded to 20% margin requirement. However there are certain situations where the position is closed out outside of the parameters which have been set by ICM Capital. This may occur due to a sudden surge in market prices or when a client does not pay a debit owing to the account. In these instances the company will pursue the individual owing the monies to recoup the loss. If an exceptional situation arises where this cannot be recovered ICM Capital will have to incur a loss.
This Risk crystallizes when the internal processes, employees and systems are inadequate for the operation of the business.
Operational Risks can fall into the following categories:
- IT Failure
- Internal & External Fraud
- Disaster Recovery & Business Continuity
- Administrative Errors
- Regulatory enforcement
The Company has identified these as key areas for risk exposure. These risks cannot be eradicated in their entirety as they are risks which are reliant on external events and are somewhat outside the control of the Company. However, to mitigate these risks ICM Capital has adequate key personnel and a well established organizational structure in place.
As new events and operational risks arise ICM Capital is constantly evolving and adapting its processes and procedures to diminish the impact of these risks on the company.
This is the Risk that ICM Capital will encounter in meeting the obligations of Financial Liabilities as and when they arise.
The Board of ICM Capital is acutely aware of when and how often payments fall due to creditors and have made substantial provisions to the liquidity of the Company to cover such payments.
The liquidity of the Company is monitored on a daily basis.
6. Capital Adequacy
ICM Capital promotes a two pronged approach to its business objectives. These are:
- Total Compliance with Regulatory obligations
- To make certain that the business is fully functional as a money making enterprise.
The board of ICM Capital regularly meets to ensure that these objectives are being met by analyzing the risk to which the business is exposed to on a regular basis. This is done by full cooperation with the Compliance department and by placing importance upon maintaining our relationship with our regulator, the FSA.
Capital is injected into the business by the owners in the limited partnership to ensure that our requirements are met and frequently are exceeded. This guarantees ICM Capital's operation as a going concern at all times.
ICM Capital Ltd has a well established internal assessment process to quantify our capital requirements. This is reviewed on a regular basis and encompasses all of the relevant risks to which the company is exposed to in the market. The Board of ICM Capital holds final approval on the document.
The board of ICM Capital is dedicated to the principle that maintenance of a healthy capital base can support and grow the business.