Pillar 3 statement

Piton Capital LLP
Disclosure under Pillar 3 of Capital Requirements Directive
sDate: 30th November 2010

The Pillar 3 disclosure will be kept at the firm’s registered office and sent to whosoever requests it.

The Partner’s report will state once a year “The firm has documented the disclosures required by the FSA under BIPRU 11.3, which are available from the registered office.”

Background

Piton Capital LLP (“the Firm”) is authorised and regulated by the Financial Services Authority and is categorised as a BIPRU €50,000 Limited Licence Firm for regulatory purposes. The disclosure has been prepared by the firm in accordance with BIPRU 11 and summarises the material disclosures the firm is required to make under Pillar 3 of the Capital Requirements Directive.

Risk management objectives and policies

The business strategy and risk appetite are determined by the Partners. Based on this, a risk management framework, geared to the specific risks that are applicable to the firm, is devised and put into practice.

The Firm’s main categories of risk and its management objectives and policies for these categories are as follows:

Risk	Strategy/process to manage risk	Structure of risk management function	Risk reporting and management systems	Policy for hedging and mitigating risk
Operational risk	All of the firm’s procedures are documented in its compliance manual which is read by all key staff.	The firm is small and has a simple operating infrastructure. Compliance is overseen by the Compliance Officer.	Report compiled periodically by the Compliance Officer and discussed at meetings of the partners.	The opportunity to mitigate operational risk is reviewed regularly by the partners.
Business risk	The firm’s risk appetite and its willingness to accept business risk are defined by its partners	The risk management function is overseen by the partners.	Business risk is discussed at regular partners’ meetings.	Business strategy is managed and updated on a day to day basis by the firm’s partners.
Credit risk	No credit is extended to clients.	A list of the firm’s exposures to counterparties is maintained as part of the accounting function.	Monthly management accounts detail the firm’s exposure to credit risk.	Management fees are collected within one month.
Market risk	The firm does not incur market risk as it receives its fee income in sterling and therefore does not maintain assets or liabilities in any currency other than sterling.	If the risk did occur it would be monitored as part of the accounting function.	Monthly management accounts reviewed regularly by the partners.	If non-sterling fees did occur, foreign currency hedges would be entered into when deemed appropriate.
Financial risk	The risk of firm breaching regulatory capital requirements or falling short of its cash flow obligations is monitored as part of the accounting function.	Reviewed by partners. Where necessary external advice is sought from compliance consultants and or accountants.	Internal reporting to the partnership is on a monthly basis. Regulatory reporting to the FSA is on a quarterly basis.	Potential deficits are identified at an early stage and further capital/loans injected as necessary.

Capital Resources

The firm is a BIPRU €50,000 Limited Licence Firm and has calculated its capital resources in accordance with GENPRU 2.2. The firm’s capital resources are detailed in the table below.

	£000
Tier 1 capital resources	132
Tier 2 capital resources	0
Tier 3	0
Deductions form total capital e.g. illiquid assets	0
Total Capital Resources as at 30th November 2010	132

Capital Resource Requirements

The Firm’s Pillar 1 requirement is calculated as the higher of:

1. The Base Capital Requirement (€50k)

2. The sum of:

The Credit Risk Capital Requirement; and

The Market Risk Capital Requirement.

3. The Fixed Overheads Requirement (3 months expenditure)

In the opinion of the partners the highest of these three is always likely to be the Fixed Overhead Requirement and therefore none of the Base Capital Requirement, the Credit Risk Capital Requirement or the Market Risk Capital Requirement are material to the Firm.

Pillar 1

As at the date of this report the Firm has a surplus of capital resources over its Pillar 1 capital resources requirement.

Pillar 2

The Firm has undertaken an Internal Capital Adequacy Assessment Process (ICAAP) to determine whether it needs any further regulatory capital due to the operational, business, credit and market risks it faces.

As a result of this the Firm has concluded that it does not need any further regulatory capital to meet its requirements under Pillar 2.