Disclosure Report 2008 |
Introduction
Incorporation & Principal Activities
Pulp International Business Limited (the Company) was
incorporated in Cyprus on 21 June 2008 as a Limited Liability
Company under the Companies Law, Cap. 113. Its registered office
is at Georgiou Katsounotou 3, KYTALLIDES Court, 3rd floor,
Office 3A, 3036 Limassol, Cyprus.
Change of Company Name
On 3 March 2009, the Company changed its name from Prime Forex
Financial Gateway Limited to Pulp International Business
Limited.
Principal Activities
The Company is a licensed Investment Firm in Cyprus under
license number 095/08 dated 6 November 2008 granted by the
Cyprus Securities and Exchange Commission. The Company is
licensed to provide the investment services of reception and
transmission of orders, execution of orders on behalf of clients
and dealing on own account in relation to Financial Contracts
for Differences (CFDs). The company is also licensed to provide
the ancillary service of safekeeping and administration of
financial instruments, including custodianship and related
services.
Pulp International Business Limited (hereinafter FxPulp) is
regulated and licensed by The Cyprus Securities and Exchange
Commission (CYSEC), under license reference: 095/08 is an
Investment Firm Following the implementation of the Markets in
Financial Instruments Directive (MiFID) in the European Union
and in accordance with the Investment Services and Activities
and Regulated Markets Law of 2007 (Law 144(I)/2007) in Cyprus.
This document has been prepared by
Pulp International Business
Ltd. Pulp International Business got its license from CySEC
(Cyprus Security and Exchange Commission) at 6th of November
2008 and as at 31st of December 2008 the company had no clients
funds. The disclosures below were in place as at 31st of
December 2008 but since the Company was not active; we could not
use a lot of numerical analysis.
Pulp International Business Limited in line with its internal
policies and CySEC requirements has prepared the following
disclosures in order to comply with CySECs rules and regulations
that are required by the EU Directive DI144-2007-05 (Disclosures
and Market Discipline Pillar 3).
Basel II is based on three mutually reinforcing pillars:
- New and considerably more sophisticated minimum capital
requirements, including specific capital charges for
operational risk (Pillar 1);
- Institutions own assessments of their capital adequacy
and enhanced supervision of capital management (Pillar 2);
and
- Materially increased disclosure requirements (Pillar 3).
Financial Risk Management
The Companys risk management is focused on the key areas of
credit risk, market risk and operational risk. The following
diagram shows the risk management structure of the company:
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Board of Directors
The Board shall be responsible for ensuring that the Company
complies with its obligations under the Law. The Board shall
assess and periodically review the effectiveness of the
policies, arrangements and procedures put in place to comply
with the obligations under the Law, and to take appropriate
measures to address any deficiencies. The Board shall ensure
that it shall receive on a frequent basis and at least annually
written reports regarding Compliance, Internal Audit and Risk
Management issues, indicating, in particular, whether the
appropriate remedial measures have been taken in the event of
any deficiencies. The Board shall be responsible for the
monitoring of the internal control mechanisms of the Company to
enable prevention of activities outside the scope and strategy
of the Company and the prevention of any unlawful transactions,
the identification of risks, and the timely and adequately flow
of information. Furthermore, the Board shall pass a resolution
for selecting a service provider or endive for outsourcing.
Compliance Officer
The Board shall appoint a Compliance Officer in order to
establish, implement and maintain adequate policies and
procedures designed to detect any risk of failure by the Company
to comply with its obligations, and put in place adequate
measures and procedures designed to minimize such risk and to
enable the competent authorities to exercise their powers
effectively. The Compliance Officer shall report directly to the
Managing Director of the Company. The Compliance Officer shall
be independent and shall have the necessary authority,
resources, expertise and access to all relevant information.
The Compliance Officer shall be responsible for the
following:
- Liaising with all
relevant business and support areas within the Company
- Monitoring the
adequacy and effectiveness of the measures and procedures of
the Company
- Advising and
assisting the relevant persons responsible for carrying out
the investment services be in compliance with the Law
- Drafting written
reports to the Board indicating in particular whether the
appropriate remedial measures have been taken in the event
of any deficiencies at least annually
- Working on related
changes to the Companys documentation
- Training and
educating the staff of the Company in respect with the
compliance function according to the Law
- Communicate the
relevant statutes of the Internal Operational Manual to each
employee and notify them of any relevant changes therein
that relates to his/her role and responsibilities in the
Company
- Ensuring that the
Executive Directors or other hierarchical officers do not
exercise inappropriate influence over the way in which a
relevant person carries out the provision of investment and
ancillary services
- Ensuring that all
the procedures regarding the Companys conflict of interest
policy are in place and establishing and maintaining Chinese
Walls procedures between the various organizational units of
the Company. Regular checks will be performed to ensure the
latter
- Ensuring that all
employees will have the ability to identify cases of
potential conflicts of interest. The latter will be verified
at least once a year
- Deciding whether to
allow or not a transaction by notifying Clients, after being
informed by members of the staff of a potential conflict of
interest situation.
- Making/overseeing
the disclosure to Clients or potential Clients of the
general nature and any potentially present conflicts of
interest.
- Keeping records
regarding conflict of interest situations, where relevant.
- Become updated and
communicate to the Head of Dealing on Own Account of the
Company the requirements of CySEC relating to any lists to
submit to CySEC in relation to the Companys activities as
Systematic Internaliser.
- Establishing
measures in connection with personal transactions and notify
each relevant person of the restrictions on personal
transactions.
Risk Manager
The Board shall appoint a Risk Manager to ensure that all the
different types of risks taken by the Company are in compliance
with the Law and the obligations of the Company under the Law,
and that all the necessary procedures, relating to risk
management are in place. The Risk Manager shall report directly
to the Managing Director of the Company.
The Risk Manager shall be responsible, as necessary, for:
- Complying and
implementing the relevant provisions of the Law, relating to
risk management issues
- Requiring
sufficient information from all the relevant departments of
the Company, as applicable
- Educating and
training the personnel of the Company or risk-related issues
- Examining the
financial results of the Company
- Analyzing the
market and its trends (from a risk management perspective),
as applicable
- Evaluating how the
introduction of any potential new services or activities by
the Company could affect the risk management of the Company,
and provide such requests to the Senior Management or the
Board, as requested
- Examining the
capital adequacy and the exposures of the Company
- Provide reports and
advice the senior management, as requested
- Setting, updating
and monitoring Client and counterparty limits
- Maintaining a
record of all the Clients and counterparties risk and limits
involved
- Recommending,
providing and supervising policy description concerning
information systems (including back up systems that can
restore smooth operation in case of failure)
- With respect to
liquidity risk and market risk:
- define acceptable maximum risk assumption limits
per class of risk
- break down the above risk limits further where
necessary, for example, per class of investment
service or financial instrument, or Client or
market, etc
- implement stop loss-control limits, where
applicable
- follow up open positions within the approved
limits
- Monitoring the
amount and type of information provided to Clients regarding
the nature and risks of financial instruments according to
the Client classification.
Internal Capital Adequacy
The company's internal capital levels and future requirements are
managed by the board of directors and the compliance officer.
Any increase in the capital requirements of the company due to
unforeseen circumstances or due to a change in the company's
forecasts or business plan must be assessed and approved by the
board of directors. The capital resources model is then updated
by the finance department to reflect such changes.
Capital Resources
A summary of the Company's total capital as at 31st of December
2008 is shown below:
Equity & Reserves
|
Share Capital |
1,000,000 |
|
Accumulated Losses |
( 180,151) |
|
Total Capital Resources |
819,849 |
Market Risk Management
The Company is exposed to market risk, operational risk, credit
risk and capital risk management arising from the financial
instruments it holds. The risk management policies employed by
the Company to manage these risks are discussed below:
Market Risk
Market risk is the risk of loss arising from adverse movements
in the level or volatility of the exchange rate in which the
company and its clients hold positions. The company considers
market risk to consist of credit, financial and liquidity risk.
Credit risk refers to the risk of financial loss due to the
default of a counterparty to pay money owed to the company.
Financial and liquidity risk refers to the risk of suffering
financial loss or loss of permission to operate due to improper
financial reporting, poor management of revenues, costs and
liquidity, and / or due to financial crime.
Credit Risk
FxPulp defines credit risk as the risk of financial loss
resulting from the failure of a counterparty or Customer to
honour its obligations to the company as its falls due.
The companys credit risk requirement consists of its credit risk
and counterparty risk capital components.
The credit risk capital component is arrived at by taking our
non trading book debtors, applying risk weightings to these
exposures and then calculating 8% of the total risk weighted
exposures.
The counterparty risk capital component takes 8% of the companys
total risk weighted exposure amounts and unsettled transactions
in the trading book.
FxPulp makes margin calls and occasionally holds collateral in
order to mitigate its exposure to counterparty risk in the
trading book. Margin calls comprise both initial and variation
margins and take account of any minimum call facility or credit
line which may apply to the account.
Netting agreements are in place with the majority of our clients
giving us right of set off and this substantially reduces our
credit exposure in this area.
Operational Risk
Operational risk is the inherent risk to the business of
financial loss or loss of reputation arising from failures in
the internal processes, systems and controls of the company.
This includes errors, omissions, disasters and deliberate acts
such as fraud.
Management of Operational Risk Systems & Internal Processes
Customer limits and positions are monitored on a daily and
intra-day basis by the risk managers and the managing director
to prevent unacceptable exposure to market movement.
Systems for recording trades are such that disputes and errors
are identified, and where possible resolved, before the start of
the next business day. There is a daily reconciliation of trades
on client and broker accounts and all errors must be reported
immediately to the managing director. All trades are confirmed
to clients daily.
All IT systems are monitored daily with maintenance carried out
daily, weekly, monthly and ad hoc where needed. All servers are
backed up overnight and the data stored off site. The network
has Firewall protection.
Employee access to all areas of the network is password
protected.
FxPulp has a disaster recovery site in place which the company
could operate out of in the event of a disaster occurring in
London, thus ensuring business continuity at all times. All
senior management and staff are aware of the procedures to
follow should such an event occur.
Capital Risk Management
The Company manages its capital to ensure that it will be able
to continue as a going concern while maximizing the return to
shareholders through the optimization of the debt and equity
balance.
The disclosures have been reviewed by the Board but have not
been subject to an external audit.
Location of Publication
This report will be published on the Firms website
www.fxpulp.com. |