Since 1 January 2014, capital requirements applicable to SGIL are defined by the Capital Requirements Regulation (CRR) and the Capital Requirements Directive (CRD), which together comprise (CRD IV).
Under CRD IV, SGIL is an IFPRU €730K firm (as defined by the FCA) and needs to comply with the EU CRR and the FCA’s IFPRU handbook.
This Basel framework is structured around three ‘pillars’:
- Pillar 1 sets out the minimum capital requirements firms will be required to meet for credit, market and operational risk.
- Pillar 2 requires a firm to undertake an Internal Capital Adequacy Process (ICAAP) to establish if whether the Pillar 1 capital is adequate to cover all the risks faced by the firm and also ensures that it can meet its liabilities as they fall due. If the Pillar 1 capital is considered insufficient then the firm must calculate the additional amount required.
- Pillar 3 sets out market discipline and requires a firm to disclose specific information on its risk management policies and procedures and the firm’s capital resources.
The CRR sets out specific disclosure requirements. The below document is intended for SGIL to meet those requirements therein.