Pillar 3 Disclousure

1 Introduction

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.

Global Market Index Limited is authorised and regulated by the Financial Conduct Authority and this document sets out how the Firm complies with its obligations to identify, manage and mitigate risks.

2 Overview

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.

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 Board. The disclosures are not subject to audit except where they are equivalent to those prepared under accounting requirements for inclusion in the financial statements.

The report and all future ones will be published on our Firm’s website.

2.2 Scope of disclosure

Global Market Index Limited (GMIUK) is an Financial Conduct Authority “FCA” authorised execution only broker for elective professional clients and eligible counterparties.

3 Governance Arrangements

3.1 The Management Body

The Board 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 Board 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 Board propagated down throughout the business as appropriate.

The Governance Arrangements of the management body of Global Market Index Limited is illustrated below:

Board of Directors

The Firm has reviewed the number of directorships held by members of the Board/The Director has assessed the number of directorships held and are satisfied that the arrangements are such that the management body is able to commit sufficient time and resources to perform their obligations in the Firm. The number of directorships held is monitored on an ongoing basis.

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 EUCRR requirements for Pillar 1 where the Board considers 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 Board once a year, Senior Management review risks and the required capital more frequently and will particularly do so 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.

As of 31/12/20 the firm has a CET1 capital ratio of 44.72%.

4.1 Capital Resources

The Firm is a BIPRU firm because it operates as a limited license matched principal broker that does not holds client money.

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:

• Base Capital Requirement OR
• Credit Risk plus Market Risk plus Counterparty Risk Capital Requirements OR
• Fixed Overhead Requirement

The Firm must maintain at all times capital resources equal to or in excess of the Pillar 1 requirement. During the 12-month accounting period to 31st December 2020, the Company complied fully with all capital requirements and operated well within regulatory requirements. As at 31st December 2020 the firm held Tier 1 capital resources of c. £ 1,099,794 comprised of ordinary share capital, share premium, and profit and loss reserves. The Board are therefore comfortable that the Firm is, and has been throughout the financial year, adequately capitalised for Pillar 1 purposes. The Board 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 Board constantly monitors 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

Global Market Index Limited has identified the following core risk categories: e.g. strategic, market, credit, liquidity, operational, legal, interest rate, excessive leverage and financial crime.

Global Market Index Limited’s profile of these risks is continually evolving and is generally driven by:

• Changes to the market in which we operate;
• Global Market Index Limited’s strategies and business objectives and;
• Global Market Index Limited’s business/operating models

Global Market Index Limited 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 Board 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 Three Lines of Defence

The Firm’s governance structure is designed such that the business is the first line of defence, the compliance function is the second line of defence with the Board representing the third line of defence.

5.4 Risk Assessment Framework

The Board 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

Global Market Index Limited’s 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 Firms’ business strategy, objectives, values and long term interests in respect of performance and effective risk management in line with the Firm’s risk appetite.

A copy of the Firm’s Remuneration Policy is available on request.