Pillar 3 Disclosure

Introduction

The Capital Requirements Directive (“CRD”) represents the EU’s interpretation and application of the proposals arising from the Basel Committee to provide a framework for the international convergence of capital standards across all European regulated firms other than insurance companies.

The CRD sets out a three-pillar framework:

• Pillar 1: Rule-based minimum capital requirements;
• Pillar 2: Supervisory review and the setting of capital requirements for individual firms through the Individual Capital Adequacy Assessment Process (“ICAAP”); and
• Pillar 3: Disclosure requirements.

The disclosures detailed in this document relate to Phanar Asset Management  AG (“Phanar”) and are made as of 28 February 2021.

This Pillar 3 disclosure document explains the basis of preparation of certain capital requirements and provides information about the management of specific risks. The disclosures are not subject to audit, do not constitute any form of audited financial statements and have been produced solely for the purposes of fulfilling the Pillar 3 requirements. These disclosures have been reviewed and approved by the Phanar Board of Directors and are published on the corporate website:

https://www.phanar.com

Frequency of Disclosure

Phanar Asset management will report their Pillar 3 disclosure annually. These disclosures are based on the company’s position as at end of February. The Pillar 2 (ICAAP) capital requirements are excluded from this summary but are reviewed annually or upon material change.

Regulated Structure

Phanar Asset management is authorised and regulated by FINMA. The company is owned by its shareholders.

SCOPE

The Pillar 3 disclosures in this document relate solely to Phanar Asset Management

Phanar Asset Management. provides investment management and advisory services to segregated mandates and mutual funds. Ultimately, Phanar Asset Management is owned by its shareholders.

Risk Management

The Board of Phanar Asset Management is committed to a robust control environment throughout the organisation, is accountable for risk and is responsible for oversight of the risk management process for Phanar Asset Management. The Board of Phanar Asset Management regularly reviews the key risks that Phanar Asset Management faces, and by fully understanding each risk, the associated mitigating actions and the overall control environment, the Board can be comfortable with the management of those risks.

Risk Assessment

Risks are assessed using a top down and bottom up approach to ensure all areas of business and compliance risks are identified. The Committee assesses, analyses, investigates and escalates all matters which may expose Phanar Asset Management to unacceptable risk. Risk mitigation is achieved through effective controls taking preventative action where required, strong governance and a risk aware culture.

Risk Management by Risk Category

Phanar Asset Management’s risk management focuses on the main areas of credit, market and operational risk. Phanar Asset Management has clear risk management objectives and policies to mitigate each category of risk. These include processes to identify, measure, monitor, manage and ultimately mitigate risk.

Credit Risk

Phanar Asset Management’s credit risk is its exposure to a counterparty or a group of connected counterparties failing to meet their obligations, including third-party debtors (fee income and other debtors). There is no history of losses in respect of third-party debtors, as they are carefully monitored and are low risk by nature. The key credit risk facing Phanar Asset Management is the failure of a counterparty where Phanar Asset Management’s operating cash or surplus cash is held.

Market Risk

Phanar Asset Management does not carry out any principal trading. In addition, it does not provide any seed capital for products managed or operated by the Phanar Asset Management.

Phanar Asset Management has exposure to foreign exchange risk on foreign currency cash deposits held and management fee accruals that are denominated in foreign currencies.

The Phanar Asset Management policy with regard to foreign currency cash balances is to maintain sufficient balances in order to be able to pay foreign currency invoices as they fall due but to otherwise convert all foreign currency receipts back into local currency. This is consistent with the requirement not to hold non-local currency balances for speculative purposes.

The main foreign exchange risk that Phanar Asset Management is exposed to is via its fee income, as the much of its fee income is denominated in currencies other than Swiss francs (CHF).

Operational Risk

Phanar Asset Management’s operational risk is its exposure resulting from inadequate or failed internal processes, people and systems or from external events. Although operational risk is inherent in Phanar Asset Management’s investment management activities, Phanar Asset Management strives to avoid it. Operational Risk is managed through a proactive approach to identifying operational risks and closely monitoring the effectiveness of the controls designed to mitigate and monitor those risks.

Business Risk

Phanar Asset Management’s business risk is its dependence on fee income derived from client activity (advisory and discretionary asset management business). This could be the termination of mandates, unsatisfactory performance or changes to the regulatory environment. The exposure to Business Risk is mitigated by engaging in various business activities which should allow for adequate diversification and provide a certain resilience against changes in the business environment.

Reputational risk

Phanar Asset Management’s Reputational Risk is its reliance on its reputation for providing clients with high quality advise, market conform performance and a competent client relationship process. It is therefore essential that Phanar Asset Management’s has guidelines in place which ensure the above service level.

DISCLAIMER

This document is issued by Phanar Asset Management AG, which is authorised and regulated by FINMA, and may not be reproduced or distributed, in part or in full, without prior authorisation.

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