Pillar 3 Disclosures
The Capital Requirements Directive (‘CRD’) implemented the Basel capital adequacy framework (‘Basel II’), and applies to certain investment firms, banks and building societies.
The CRD comprises three key components or ‘pillars’ as follows:
- Pillar 1: Minimum Capital requirements
- Pillar 2: Supervisory review
- Pillar 3: Market Discipline/Disclosure requirements
The implementation of the CRD required regulated firms to make changes to the way their capital requirements are calculated (Pillar 1), the process for supervisory review of the firm’s risk management framework and capital adequacy (Pillar 2) and the disclosure to the market of key information about risk exposures and risk management processes (Pillar 3).
IFG Group PLC (IFG) completed the purchase of the James Hay group of companies in March 2010; this included James Hay WRAP Managers Ltd (the Firm). From this date, the firm became responsible for complying with the minimum capital requirement provisions under Pillar 1 of the CRD and completing and maintaining its Internal Capital Adequacy Assessment Process (ICAAP) under Pillar 2 of the CRD. The James Hay WRAP Managers Ltd ICAAP has been designed to capture and address any risks not fully considered under Pillar 1 and to ensure that adequate measurement and assessment of any such risks is considered in determining the capital requirements of the firm.
The aim of Pillar 3 is to improve market discipline by requiring firms to publish certain details of their risks, capital and risk management. Institutions are required to certify to the FSA on an annual basis that they have complied with the new disclosure requirements. The disclosures are required on an annual basis aligned to the institution’s annual reporting cycle.
To read the full James Hay Wrap Manager's Pillar 3 Disclosure document, please click here.