LEGAL

 

Daedalus Partners LLP is a limited liability partnership registered in England and Wales with registration number OC365551. Its registered office is at 4th Floor, 59 Grosvenor Street, London,
W1K 3HZ. A list of members of the LLP is available upon request.

 

Daedalus Partners LLP, is authorised and regulated by the Financial Conduct Authority (Register number 564221), see http://www.fca.org.uk/register for registration details.

 

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Daedalus Partners LLP (‘The Partnership’)

PILLAR 3 DISCLOSURE

 

As at 31st March 2016

 

The Capital Requirements Directive (‘the Directive’) of the European Union establishes a revised regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investment Partnerships must maintain. In the United Kingdom, the Directive has been implemented by the Financial Conduct Authority (‘FCA’) in its regulations through the General Prudential Sourcebook (‘GENPRU’) and the Prudential Sourcebook for Banks, Building Societies and Investment Partnerships (‘BIPRU’).

 

Frequency of Disclosure

 

It is the intention of the Company to update its Pillar 3 on an annual basis (after the previous year’s annual accounts have been audited and finalised, unless circumstances warrant a more frequent updated. Disclosures will be published as soon as practicable following any revisions. The Company makes its Pillar 3 disclosure via its company website.

 

The FCA framework consists of three ‘Pillars’:

 

Pillar 1 sets out the minimum capital amount that meets the Partnership’s credit, market and operational risk;

 

Pillar 2 requires the Partnership to assess whether its Pillar 1 capital is adequate to meet its risks and is subject to annual review by the FCA; and

 

Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position.

 

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet our Pillar 3 obligations.

 

We are permitted to omit required disclosures if we believe that the information is immaterial such that omission would be likely to change or influence the decision of a reader relying on that information.

 

In addition, we may omit required disclosures where we believe that the information is regarded as proprietary or confidential. In our view, proprietary information is that which, if it were shared, would undermine our competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and counterparties.

 

We have made no omissions on the grounds that it is immaterial, proprietary or confidential

 

Scope and application of the requirements

 

Daedalus Partners LLP (“the Partnership”) is authorised and regulated by the Financial Conduct Authority and as such is subject to minimum regulatory capital requirements. The Partnership is categorised as a limited licence firm by the FCA for capital purposes. It is an investment management firm and as such has no trading book exposures.

 

The Partnership is not a financial holding company as defined by FCA regulations and so is not required to prepare consolidated reporting for prudential purposes.

 

Risk management

 

The Partnership is governed by its Members who determine its business strategy and risk appetite. They are also responsible for establishing and maintaining the Partnership’s governance arrangements along with designing and implementing a risk management framework that recognises the risks that the business faces.

 

The Members determine how the risk our business faces may be mitigated and assess on an ongoing basis the arrangements to manage those risks. The Members meet on a regular basis and discuss current projections for profitability, cash flow, regulatory capital management, and business planning and risk management.

 

The Members manage the Partnership’s risks business though a framework of policy and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.

 

The Members have identified that business, operational, and credit risks are the main areas of risk to which the Partnership is exposed. Annually the Members formally review their risks, controls and other risk mitigation arrangements and assess their effectiveness. Where the Members identify material risks they consider the financial impact of these risks as part of our business planning and capital management and conclude whether the amount of regulatory capital is adequate.

 

Regulatory capital

 

The Partnership is a Limited Liability Partnership and its capital arrangements are established in its Partnership deed. Its capital contains only members’ capital contributions.

 

Our Partnership is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its accounts receivable in foreign currency, and credit risk from management and performance fees receivable from the funds under its management. The Partnership follows the standardised approach to market risk and the simplified standard approach to credit risk.

 

The Partnership is subject to the Fixed Overhead Requirement (‘FOR’).

 

The Partnership is a limited licence firm and as such its capital requirements are the greater of:

 

•     Its base capital requirement of €50,000; or

•     The sum of its market and credit risk requirements; or

•     Its Fixed Overhead Requirement

 

We have not identified credit risk exposure classes or the minimum capital requirements for market risk as we believe that they are immaterial in the context of our business.

 

The FOR is calculated as an amount that is equal to one quarter of the firm's relevant fixed expenditure calculated in accordance with GENPRU 2.1.54 R.

 

The most recent audited report and accounts shows a FOR of £58,974, which is greater than the base capital requirement of €50,000.

 

As market and credit risks are considered immaterial then we believe that our FOR of £58,974 adequately defines our capital requirements and is well within the level of capital held by the Partnership.

 

We consider this amount to be sufficient regulatory capital to support the business and have not identified any areas which give rise to a requirement to hold additional risk based capital.

 

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