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ABANS GLOBAL LIMITED

INTERNAL CAPITAL ADEQUACY ASSESSMENT PROCESS Updated 15th May 2018

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CONTENTS PAGE

EXECUTIVE SUMMARY

ICAAP - THE PROCESS

THE RISK IDENTIFICATION PROCESS

MATERIAL RISKS LIQUIDITY PLANNING SUMMARY OF CURRENT & PROJECTED FINANCIAL AND CAPITAL POSITIONS

STRESS TESTING OF CAPITAL PLANNING PROJECTIONS

VALIDATION AND ADOPTION OF THE ICAAP USE OF THE ICAAP WITHIN THE FIRM

APPENDICES APPENDIX 1: RISK MANAGEMENT POLICY IINCLUDING RISK MATRIX)

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EXECUTIVE SUMMARY

All the information below refers to ABans Global Limited [“AGL” or the “Firm”] and not to other members of the Group.

This Internal Capital Adequacy Assessment Process (ICAAP) provides a documented record of AGL’s [or the “Firm’s”] assessment of its capital requirements based on:

a) Current financial performance;

b) Future financial performance projections;

c) Strategic business expansion planning; and

d) Identification of Pillar 1 capital requirements, Pillar 2 risks, and AGL’s assessment of the impact of external factors.

The ICAAP also provides information and rationalisation to the Board of the on-going assessment of the firm’s risks, how it intends to mitigate those risks and detailing current and future capital and liquidity requirements, having considered all mitigating factors. This ICAAP is the primary document to demonstrate the Firm’s internal adequacy assessment process.

The ICAAP documentation process is to ensure that the firm meets its overall capital adequacy requirements at all times as well as to maintain overall financial resources and internal capital, own funds and liquidity which are adequate both as to amount and quality thus ensuring that there is no significant risk of the firm not meeting its liabilities as they fall due. As a prerequisite to the preparation of the ICAAP, senior management of the firm has established a “Risk Management Framework”. There are definitions of the risks that are inherent in the business model, the systems, controls, policies and procedures that have been put in place to manage/mitigate defined risks as well as assessing the probability and impact of any residual risks in order for the management to assess capital requirements arising.

AGL is currently categorised as a €125K Limited Licence IFPRU Investment Firm. As a result of its permissions, the firm has been subject to CRD IV with effect from 1 January 2014 and the firm is

mandated to comply with the following prudential requirements from that date.

the Capital Requirements Regulation (CRR);

the IFPRU sourcebook of the FCA Handbook;

the relevant technical standards released by the EBA as they come in to force; and

the BIPRU sourcebook of the FCA Handbook (in respect of BIPRU 12).

AGL currently falls outside of the definition of “Significant IFPRU Firm”, which means that certain more onerous requirements will not apply. In due course, as the assets of AGL grow, this may need to be considered.

The ICAAP uses AGL’s budget projections for the three years following the financial year ended 31 March 2018. These projections were prepared in May 2018.

Profitability and capital retention of the Firm is clearly a major determinant in assessing the adequacy of AGL’s capital. It is one of a number of factors which include:

a) An assessment of AGL’s exposure to unquantifiable risk

b) AGL’s risk control methodology

c) AGL’s stress testing of its financial projections

(a) and (b) are addressed in “The Risk Identification Process”. (c) is addressed in “Stress Testing of Capital Planning Projections”.

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The comparison between the Pillar 1 capital requirements and our calculation of any additional Pillar 2 capital requirements following the ICAAP process and documentation are summarised in the table below.

Based on the results of this ICAAP, which are supported by realistic and appropriate calculations and forecasts in the opinion of AGL’s management, AGL’s current capital is adequate and would meet the CRD requirements for the next three years given the scope of the Firm’s activities, risk exposures and risk appetite, which are expanded upon in the following sections.

As of 31 March 2018 AGL’s regulatory capital (Total capital) was $8,146k. The main findings of the ICAAP analysis were:

a) This amount is adequate for the size and complexity of business, measured against the capital resource requirement (CRR) ‘Pillar 1’ calculation;

b) This amount is adequate for the size and complexity of business, measured against the capital resource requirement (CRR) ‘Pillar 2’ calculation;

c) AGL’s risk management processes are satisfactory; and

d) AGL has adequate resources over its planning horizon taking into account the dividend policy and the potential impact of an economic downturn as tested in the scenario analyses.

The actual Pillar 1 capital requirements measured against the Pillar 2 requirements are given in the following table. The calculations are based on the unaudited financials for the year ended 31 March 2016.

MARCH 2018 Pillar 1 Pillar 2

$,000 $,000

Credit risk 552

Market risk 6

Fixed Overheads Requirement 55

Higher of FOR and aggregate of credit & market risk

558

Base Capital Requirement 558

Pillar 1 total 558

Pillar 2 requirements

Pillar 2 risk - Operational Risk 70

Pillar 2 total 70

Orderly wind down costs 65

ICAAP capital 628

Current total capital (Tier1+Tier 2) 8,146 8,146

Surplus 7,588 7,518

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This report has been placed before and approved by the Board of Directors, which constitutes the governing body of the firm. The ICAAP is reviewed by the Board of Directors at least annually although there may be interim reviews depending on market conditions and business developments.

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ICAAP – THE PROCESS

1 Background Information

AGL was incorporated on 16th April 2010 under the Companies Act, 2006. The Company is registered

in England and Wales under the Company Registration No. 7225900. The registered office of the company is situated at Birchin Court, 20 Birchin Lane, London, EC3V 9DU, United Kingdom. AGL is authorised and regulated by the Financial Conduct Authority and is currently classified as IFPRU-125K firm. The firm is involved in the business of dealing in securities, commodities, derivatives and currencies and also acts as a Financial Advisor. The network of the firm is geographically located in various countries. It is permitted to deal as principal on behalf of its clients and is also associated with the various International Broking Houses across the geographies of UK, Europe, Singapore and Middle-East. The firm has a wider vision to deal with regional and international investors, professional traders and institutional investors looking to invest in diverse range of sectors including precious metals, base metals, currencies and energy.

2 Summary of the Firm’s Regulated Activities

AGL is currently authorised by the FCA to carry out the following regulated activities:

Advising on investments; Arranging (bringing about) deals in investments; Arranging safeguarding and administration of assets; Causing dematerialised instructions to be sent; Dealing in investments as agent; Dealing in investments as principal (currently matched principal basis); Managing Investments; Making arrangements with a view to transactions in Investments; and Sending dematerialised instructions.

The Firm is permitted to hold client money and is permitted to act for eligible counterparties and professional customers only.

3 Business Strategy & analysis

AGL’s strategy as a part of being authorised in the UK by the FCA, is to primarily provide access to wide range of products including securities, commodities/commodity futures, derivatives and currencies on a matched principal basis. The Firm therefore has a very simple business model.

AGL is a member of the ABans Group of Companies, with affiliates in India, UAE and Mauritius. AGL a subsidiary of ABans Securities Private Limited, which is primarily a financial services provider with its customer base all over India. However all affiliates in the group operate on an arm’s length and there are currently no exposures to other members of the group, thereby not subject to any significant group risk.

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4 Business Planning Process

The Directors of AGL meet on a regular basis to discuss current performance and proposed business developments. Financial forecasts project three years into the future and are reviewed and revised on quarterly basis. Senior management is actively involved in this planning process and continually monitors actual results in line with forecasts.

A thorough risk assessment has become a core part of this planning process, the results of which are built into the projections.

5 Management Policies

The Firm has established and maintains a risk management policy. As documented in the Firm’s organisational chart, the directors, Abhishek Bansal, Harshan Kollara and Samir Rai collectively have the responsibility of establishing, implementing and maintaining adequate risk management policies and procedures.

The Firm has reviewed all risks identified and expanded these where necessary. The core document is now the “Enterprise Risk Management Policy” supplemented by the Firm’s Risk Matrix. (Appendix 1). These are built around the Firm’s permissions and the business the Firm is engaged in. These will be reviewed and updated in line with future business strategy or significant changes thereof.

As part of its regular planning process, AGL reviews its capital requirements to ensure that it has an appropriate level of capital to support its business and ensure that it has sufficient headroom to cover the realisation of any potential risks. This review is approved by its directors.

AGL's capital position is reviewed quarterly by directors as part of the Firm’s FCA reporting requirements.

AGL takes a conservative approach to its capital management. The directors understand the need for prudent financial management and the inherent risks of the business. A key factor considered in setting the level of capital is AGL's risk profile and its link to the directors’ risk appetite. In the event that this profile conflicts with the appetite, the directors will review its capital position and take action accordingly. By its very nature, a matched principal brokerage (as opposed to a Proprietary Trading Firm) has a low risk appetite.

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THE RISK IDENTIFICATION PROCESS

1 Background

The Capital Requirements Directive (CRD) includes basic requirements for institutions to have robust governance arrangements and effective processes in managing all risks. It requires all institutions to have in place sound, effective and complete strategies and processes to assess and maintain adequate capital having considered the nature and level of their risks in a forward-looking manner.

AGL has identified its operational risks through its Risk Matrix. The aim of a Risk Matrix is to provide senior management with a breakdown of the business risks that a firm believes that it faces, to provide details of the control procedures to mitigate or eliminate these risks as far as possible and to allocate the risk management control responsibilities to specific individuals within the organisation.

The intended result is to show where the greatest risks lie and whether these risks are acceptable or whether additional controls are required to reduce the exposure to acceptable limits.

“Probability” is assessed on a scale of 1 to 5 (5 being most probable). The same applies to “Impact”. “Overall” Risk is Probability and Impact multiplied together. The Residual risk is the Firm’s determination as to whether the controls are effective or need to be strengthened and the Responsibility column is also self-explanatory.

The governing body reviews the Risk Matrix at regular intervals. The aim is of course to anticipate risk management failures rather than react to problems.

2 Process

AGL’s capital is not the only mitigation available and in many circumstances risk can be addressed through adequate systems and controls. Risks that are difficult or impossible to quantify make the importance of qualitative risk controls within a firm more important and this is fully recognised by the Firm.

AGL has an established process for identifying the risks faced by it in the normal course of its business.

The responsibilities of senior management for identifying, controlling, eliminating or mitigating risk are set out in AGL’s corporate governance documentation. The allocation of specific responsibilities to specific individuals is contained in the Firm’s “Corporate Governance” documentation under section titled “Apportionment and Oversight”.

AGL identifies the risks associated with its activities in its Risk Matrix (see Appendix 1). This sets out the business risk, the control measures, responsibility for those controls and the residual risk assuming the proper implementation of the controls. The residual risk is allocated a “Risk Rating” to facilitate senior management’s appreciation of the risks faced by the Firm.

The Risk Management Policy including the Risk Matrix therein are reviewed at least annually. Proper implementation of the risk management procedures is reviewed in the Compliance Monitoring Programme at least every three months.

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MATERIAL RISKS

The FCA rules contained in IFPRU 2.2 sets out the sources of key risk that AGL should consider as part of its ICAAP. There are two rules which detail the risks that need to be considered, being the “Overall Financial Adequacy Rule” and the “Overall Pillar 2 Rule”.

The Overall Financial Adequacy Rule requires that AGL must at all times maintain overall financial resources, including capital resources and liquidity resources, which are adequate, both as to amount and quality, to ensure that there is no significant risk that its liabilities cannot be met as they fall due.

The Overall Pillar 2 Rule requires that AGL must have in place sound, effective and complete processes, strategies and systems to assess and maintain on an ongoing basis the amounts, types and distribution of financial resources, capital resources and internal capital that it considers adequate to cover:

(i) The nature and level of the risks to which it is or might be exposed;

(ii) The risk in the overall financial adequacy rule; and

(iii) The risk, that AGL might not be able to meet its Capital Resources Requirement in the future.

The Firm must have systems that enable it to identify and manage its major sources of risk given the nature and scale of its business:

(a) When considering operational risk, the rules indicate that AGL should take into account:

(i) Inadequate or failed internal processes;

(ii) Inadequate people;

(iii) Inadequate or failed systems; and

(iv) External events, including legal risk.

(b) When considering reputational risk, the rules indicate that AGL should take into account:

(i) How poor performance can affect a firm’s ability to generate profits;

(ii) The effect on its financial position should one or more key members of staff leave the Firm;

(iii) The effect on its financial position should it lose some of its largest clients; and

(iv) How poor customer service can affect its financial position.

AGL has produced a risk management policy, which is structured so as to identify the business risks that the Firm faces as a result of carrying on its business. The policy then considers the probability of occurrence and the impact if they did occur. Finally, the policy details AGL’s assessment of the degree of residual risk in light of its risk management controls.

AGL’s risk management policy considers the following risks:

Organisational Risk - Risks arising from organisation risk.

Business Strategy Risk - The risk that the business strategy does not address all strategic risks, is not approved at the appropriate level and does not allow AGL’s plans to be carried out so that its objectives can be achieved.

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Regulatory Risk. The risk that AGL suffers financial, reputational or litigation damage through failure to monitor, control and eliminate or substantially reduce regulatory compliance risk.

Credit Risk - The risk of a client or other counterpart defaulting on their obligations. The Company has some appetite for credit risk. However the Firm’s exposure to credit risk is low, given that it mainly has exposures only to the group and to reputable financial institutions.

Client Risk - The risk that AGL fails to meet its client performance and client service expectations leading to client defection and loss of revenue.

Financial Crime Risk - The risks that arise from a failure to prevent money laundering, insider dealing or market abuse.

Personnel Risk - The risk that human resource policies fail to recruit and retain competent people to enable AGL's plans to be carried out and its objectives achieved.

Legal Risk - The risk that agreements and contracts are not developed or maintained properly to protect AGL and its clients.

Infrastructure and Systems Risk - The risk that IT systems fail to support the transactions AGL carries out on behalf of its clients. This also encompasses IT systems failing to provide required management and accounting information.

Business Continuity Risk - The risk that AGL will not be able to continue to meet its obligations to its client and counterparties due to a significant interruption in its ability to function caused by external events.

Market & Transaction Risk - The risk that AGL’s revenue and/or operations might be damaged by adverse market conditions. AGL does not trade as principal, act as a market maker or hold proprietary positions. The Firm is therefore not subject to proprietary “Position Risk”. The Firm is, however, subject to market risk on short term positions resulting from foreign currency exposures in currencies other than GBP (the reporting currency). The Firm believes that the market risk requirement shown in its Pillar 1 calculations is adequate.

Operational Risk. The risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. AGL's general risk appetite is low.

Capital Adequacy and Financial Risk - Risks arising from AGL’s capital position, the adequacy of capital to support the level of current and anticipated business activities and the access to further capital. Risks arising from inadequate financial controls.

External Environment Risk - The risk that AGL may be negatively impacted by extraneous events or factors that are, not under its control.

Outsourcing Risk - The risk of failures on the part of service providers leading to failure on the part of AGL in respect of its regulatory and contractual obligations.

AGL’s risk management policy identifies the probability of the risk occurring and the procedures put in place by the Firm to control, eliminate or mitigate the identified risks. Each control process is allocated to a member of senior management for individual responsibility.

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LIQUIDITY RISK MANANAGEMENT FRAMEWORK

The FCA defines Liquidity Risk as the risk that a firm, although solvent, either does not have available sufficient financial resources to enable it to meet its obligations as they fall due, or can secure such resources only at excessive cost”.

Under BIPRU 12.3.4R the Firm is required to comply with the overarching requirement that it put in place robust strategies, policies, processes and systems that enable it to identify, measure, manage and monitor liquidity risk.

This Liquidity Risk Management Framework has been prepared in line with the Firm’s overall risk management as documented for the preparation of the ICAAP and sets out:

Liquidity risk assessment

The systems and controls in place to manage and control liquidity risk.

Stress testing

Contingency Funding Plan.

Senior management oversight.

Provisions on management and measurement.

LIQUIDITY RISK ASESSMENT

The Firm has a low tolerance to liquidity risk. The liquidity management procedures are designed to ensure significant buffers over capital requirements and in turn surpluses of liquid assets over liabilities as they fall due.

Credit risk

The Firm does extend credit to its clients. The credit risk on these exposures to the Firm is can be relatively high and impact on the Firm’s liquid asset resources.

The Firm also holds its working capital accounts at reputable global credit institutions, and again the credit risk on these exposures is considered as low.

Market risk

The Firm does not take proprietary positions. The Firm also does have any foreign exchange exposures. Market risk is therefore relatively small.

Operational risk

The Firm has an overall risk assessment framework in place. Operational risks have been defined and mitigated with systems and controls and the residual risks are perceived as low.

Business risk

The Firm does however continue to be subject to business strategy risk and the risk of an economic slowdown as experienced in the recent past and therefore a significant impact on its revenues.

SYSTEMS AND CONTROLS IN PLACE TO MANAGE AND CONTROL LIQUIDITY RISK

The liquidity management procedures are designed to ensure significant buffers over liquidity requirements and in turn surpluses of liquid assets over liabilities as they fall due. The Firm has the following arrangements in place for the management and control of its liquidity risk:

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Projected financial forecasts (including a cash flow forecast) are prepared annually. The levels of liquid resources required are reviewed monthly and the Firm believes it has a cautious approach to liquidity risk management. The Liquidity Management Framework (including the risks identified within) will be reviewed formally on an annual basis and as and when there are significant changes in the Firm’s business plan and environment.

Projected financial forecasts are compared against actual on a monthly basis and forecasts adjusted for significant variances. Variance analysis reviewed by the directors and amendments approved.

The Finance Officer is also responsible for the preparation of monthly management accounts, financial adequacy computations and impact on the Firm’s ability to meet its liabilities as they fall due. These are all distributed to the directors of the Firm and a meeting convened if necessary. This is also done at each quarter end with a formal board meeting to discuss the financial performance during the quarter. The results of any stress tests are also discussed with a view to taking corrective action if necessary.

The Firm has identified key item of Management Information regarding compliance with its liquidity risk management framework in that its liquid assets to liabilities ratio is maintained at 125% or more. This information is provided to management after the end of each month.

It is also to be noted that the directors of the Firm are very much involved in the day to day activities of the Firm and any issues of any significant impact are monitored on a daily basis.

STRESS TESTING

AGL has developed 3 year cash flow projections in line with its financial projections produced for its ICAAP. These projections are stress tested as a part of its financial resources requirements.

CONTINGENCY FUNDING PLAN

In light of the Firm’s size and business model, it is highly unlikely that the Firm will be able to obtain external funding in times of stressed liquidity conditions, the Firm is majorly owned by its Indian parent, which remains committed to providing financial support as necessary.

SENIOR MANAGEMENT OVERSIGHT

As indicated in the systems and controls section above the directors of the Firm are all actively involved in the day to day management of the Firm. Forecasts and stress tests are all reviewed and approved by designated individuals and escalated to the Board if required. Management information on the financial affairs of the company including liquidity and capital adequacy positions are provided to all the directors on a monthly and quarterly basis for review, discussion and approval.

The Chief Executive, if required will initiate discussions for contingency measures for additional injection of liquidity if the Firm’s liquid assets to liabilities ratio dips below 125%.

PROVISIONS ON MANAGEMENT AND MEASUREMENT

Pricing liquidity risk

The Firm has not taken this into consideration as external source of funding is not feasible for the Firm to cover its liquidity requirements.

Intra-day liquidity risk management

The firm’s business model, involves the extension of credit to its clients and the activities should include intra-day liquidity management. The directors, as indicated above are actively involved in the day to day management of the business and any significant events will be dealt with if necessary and as they arise.

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SUMMARY OF CURRENT AND PROJECTED FINANCIAL AND CAPITAL POSITIONS

The main sources of capital in the Firm are as follows:

Share Capital – The Firm is majorly controlled (91.8%) by its Parent, ABans Securities Private Limited; and

Audited retained earnings and reserves.

Tier 2 Preference Share funding (5% Non-cumulative Redeemable Preference Share) with a tenure of 20 years of $5000k in 2017/18.

AGL has a prudent approach to capital management. Using the output of the risk management framework as a starting point, AGL determines its capital requirements on the basis of the risks that it is subject to. The ICAAP has been integrated into this process.

Baseline financial information used in the ICAAP are as follows. In formulating the projected financials, the Firm has taken the following approach:

The Firm is a going concern. Revenues have been estimated in line with some basic fundamental assumptions.

The expenditure comprises all anticipated costs expected to occur during the course of the period covering the planning horizon. The costs include direct costs resulting from the Firm’s business operations.

These projections will be updated on an annual basis.

Summary of financial and capital positions

Profit & Loss Unaudited Projected Projected Projected

2018 2019 2020 2021

($ 000’s) ($ 000’s) ($ 000’s) ($ 000’s)

Income including interest receivable 1,721 2,047 2,348 2,692

Less direct costs (1,399) (1,609) (1,850) (2,123)

322 438 498 564

Other administrative costs (204) (225) (248) (272)

Profit before tax 118 213 250 292

Taxation (22) (40) (47) (56)

Profit after tax 96 173 203 236

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BALANCE SHEET Unaudited Projected Projected Projected

2018 2019 2020 2021

($ 000’s) ($ 000’s) ($ 000’s) ($ 000’s)

Fixed Assets Tangible assets 0 0 0 0

Investments 93 93 93 93

Current Assets Debtors & other receivables 11,147 12,204 12,421 12,644

Cash at bank 1,872 1,141 1,279 1,446

Total assets 13,112 13,438 13,793 14,183

Current liabilities & Other Loans (4,966) (5,119) (5,273) (5,426)

Net assets 8,146 8,319 8,520 8,757

Share capital (Tier 1) 1,333 1,333 1,333 1,333

Share premium (Tier 1) 1,809 1,809 1,809 1,809

Profit & loss reserves (Tier 1) 4 177 378 615

Preference Share Capital (Tier II) 5,000 5,000 5,000 5,000

Share capital & reserves 8,146 8,319 8,520 8,757

CAPITAL ADEQUACY Unaudited Projected Projected Projected

2018 2019 2020 2021

($ 000’s) ($ 000’s) ($ 000’s) ($ 000’s)

Tier 1 Capital 3,146 3,319 3,520 3,757

Less Material Holdings (93) (93) (93) (93)

Tier II Capital 5,000 5,000 5,000 5,000

Tier 1 & 2 Capital after Deductions 8,053 8,226 8,427 8,664

Pillar 1 - Requirement 558 566 581 597

Pillar 2 - Risk Assessment 70 70 70 70

Pillar 2 - Orderly wind down 65 65 65 65

ICAAP - Financial resources requirement 628 636 651 667

Surplus/(deficit) 7,425 7,590 7,776 7,997

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STRESS TESTING OF CAPITAL PLANNING PROJECTIONS

1 The Process

AGL has developed three year financial projections, which are set out above These projections have been subjected to stresses below to show the Firm’s profit and loss the impact of the various stress tests on its revenues over this period. The projections indicate the expected ranges of growth or decline in capital resources over the period as a result of various scenario analyses.

AGL has considered the impact of an economic or industry downturn on its future earnings, taking into account its business plans by exposing the expected growth and projections to a range of assumptions as to the state of the economic or business environment which it faces.

The assumptions used in this section demonstrate that AGL will have sufficient financial resources to meet regulatory requirements during the three year period.

Stress — Economic downturn of the economy of a severity that happens once every 25 years.

Scenario Definition

The current business climate represents the FCA’s severe downturn parameters – i.e. a downturn of a severity that occurs once in a 25 year period. The conclusion is that in this particular scenario there is no requirement for additional working capital for the Firm.

Impact on AGL

AGL’s business is structured to minimise fixed costs – relatively competitive salaries and performance-related bonuses. Such bonuses are paid in arrears when the performance of the company (and each stream within it) has been seen. In this way the company is set to withstand large downturns in gross revenue, simply by reducing its overall remuneration costs.

Stressed Projected AGL Profit & Loss account and capital resources for the period 2018-19 showing 50% reduction in gross income in followed by revenue reductions of 25% and 10% in years 2019-20 and 2020-21 respectively with no corresponding decrease in administrative expenses are as follows:

Summary of stress tested financial and capital positions

Stress test - Economic conditions leading to downturn and reducing income as follows: 2018-19 50%

2019-20 25% 2020-21 10%

Profit & Loss Projected Projected Projected

2019 2020 2021

($ 000’s) ($ 000’s) ($ 000’s)

Income including interest receivable 1,024 1,761 2,423

Less direct costs (804) (1,388) (1,915)

219 373 508

Other adminstrative costs (225) (248) (272)

Profit before tax (6) 125 236

Taxation (24) (45)

Profit after tax (6) 102 191

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CAPITAL ADEQUACY Unaudited Projected Projected Projected

2017 2018 2019 2020

($ 000’s) ($ 000’s) ($ 000’s) ($ 000’s)

Tier 1 Capital 3,146 3,140 3,241 3,432

Less Material Holdings (93) (93) (93) (93)

Tier II Capital 5,000 5,000 5,000 5,000

Tier 1 & 2 Capital after Deductions 8,053 8,047 8,148 8,339

Pillar 1 - Requirement 558 566 581 597

Pillar 2 - Risk Assessment 70 70 70 70

Pillar 2 - Orderly wind down 65 65 65 65

ICAAP - Financial resources requirement 628 636 651 667

Surplus/(deficit) 7,425 7,411 7,497 7,672

2. Reverse Stress Testing

Under SYSC 20, the firm is required to reverse stress test its business plan, to failure.

The firm has therefore considered a range of adverse circumstances that could cause the business plan to become unviable:

- Major counterparty default;

- Significant losses. Economic downturn resulting in revenue reductions;

- The Firm has modelled a combination of all two circumstances resulting in the Firm being unviable by 2020-21 from a capital resources point of view. The firm considers the likelihood of the above events crystallising to be remote as they would require an extreme economic crisis, significantly more severe than that seen in the markets over the recent cycles. Furthermore, the scenarios below do not allow for management actions that could be taken to mitigate such scenarios by way of the Firm’s recovery and resolution plan.

Summary of reverse stress tested financial and capital positions

Stress test - Economic & Market conditions leading to downturn and reducing income as follows:

2018-19 - reduction in revenue 75% 2019-20 - reduction in revenue 75% 2020-21 - reduction in revenue 75%

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Profit & Loss Projected Projected Projected

2018 2019 2020

($ 000’s) ($ 000’s) ($ 000’s)

Income including interest receivable 512 587 673

Less direct costs (402) (463) (532)

110 124 141

Bad debt arising from credit risk

Other administrative costs (225) (248) (272)

Profit before tax (116) (123) (131)

Taxation

Profit after tax (116) (123) (131)

CAPITAL ADEQUACY Unaudited Projected Projected Projected

2017 2018 2019 2020

($ 000’s) ($ 000’s) ($ 000’s) ($ 000’s)

Tier 1 Capital 3,146 3,030 2,907 2,776

Less Material Holdings -93 -93 -93 -93

Tier II Capital 5,000 5,000 5,000 5,000

Tier 1 & 2 Capital after Deductions 8,053 7,937 7,814 7,683

Pillar 1 - Requirement 558 566 581 597

Pillar 2 - Risk Assessment 70 70 70 70

Pillar 2 - Orderly wind down 65 65 65 65

ICAAP - Financial resources requirement 628 636 651 667

Surplus/ Deficit (+/-) 7,245 7,301 7,163 7,016

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3. Allocation to Pillar 2 capital

The Firm believes that it has the procedures, systems and controls in place to limit potential risks to the business to acceptable levels and risk appetite. Barring a set of extreme circumstances any potential costs of risks arising analysed in its Risk Matrix can be comfortably covered by a capital contribution from the Firm’s parent. AGL seeks to allocate capital for the following risks:

Foreign Exchange Risk

AGL executes client transactions only in USD and GBP. AGL is therefore subject to an exposure to monthly foreign exchange fluctuations on its net revenue until it is remitted in sterling. The Firm may also have foreign exchange requirements resulting from activities relating to the extension of credit to its clients. Most of this is provided for in its Pillar 1 capital requirements.

The Firm considers that this risk is considered by AGL to be a Pillar 2 risk and have allocated $50,000 to Pillar 2 capital requirements.

Trader Error Risk

AGL can reduce this risk as trading is directly done by the clients and risk is managed by the Brokers. Clients are well versed and experienced institutional clients and the Firm’s “Risk Officer” monitors the trading activities on an on-going basis.

AGL does not take principal positions, only executing client orders, AGLs still runs the risk of trader dealing errors. The impact of these errors caused by poor broker execution and/or the misunderstanding of a client order could lead to a loss of revenue. Although the residual risk of trading errors is low, AGL considers has decided to allocate $20,000 to Pillar 2 capital.

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VALIDATION AND ADOPTION OF THE ICAAP

This ICAAP has been prepared by AGL’s Finance Department and the Chief Executive following guidance in the FCA Handbook and accepted business plan modelling and stress testing methodologies. The assumptions on future performance are revisited at regular intervals based on current market conditions and current financial performance. Where there is significant variance, the ICAAP is revised to reflect the changed circumstances.

The maintenance of the ICAAP is the responsibility of AGL’s governing body and is reviewed as a regular component of the financial reports presented to the Board of Directors/Management Committee every quarter. Decisions to expand into new products or new business lines cannot be taken without reference to the ICAAP and such decisions require the validation of the Chief Executive and other relevant senior managers.

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VALIDATION AND ADOPTION OF THE ICAAP

This ICAAP has been prepared by AGL’s Finance Department and the Chief Executive following guidance in the FCA Handbook and accepted business plan modelling and stress testing methodologies. The assumptions on future performance are revisited at regular intervals based on current market conditions and current financial performance. Where there is significant variance, the ICAAP is revised to reflect the changed circumstances.

The maintenance of the ICAAP is the responsibility of AGL’s governing body and is reviewed as a regular component of the financial reports presented to the Board of Directors/Management Committee every quarter. Decisions to expand into new products or new business lines cannot be taken without reference to the ICAAP and such decisions require the validation of the Chief Executive and other relevant senior managers.