GBE Brokers Ltd
PILLAR III DISCLOSURES

According to Directives DI144-2014-15 and DI144-2014-14 of the Cyprus Securities &Exchange Commission for the prudential supervision of investment firms and Part Eight ofRegulation (EU) No 575/2013 of the European Parliament and of the Council on prudential
requirements for credit institutions and investment firms

YEAR ENDED 31 DECEMBER 2017

April 2018

Pillar III Disclosures Report 2017

Contents
1. Overview .....................................................................................................................................4
1.1 CIF Information .....................................................................................................................4
1.2. Scope of application .............................................................................................................5
1.3. Organisational Structure .......................................................................................................5
1.4. Regulatory framework overview ..........................................................................................6
1.5. Disclosure Policy: Basis and Frequency of Disclosure / Location and verification ............81.5.1. Information to be disclosed .......................................................................................... 8
1.5.2. Frequency ..................................................................................................................... 8
1.5.3. Medium and location of publication ............................................................................ 8
1.5.4. Verification .................................................................................................................. 9
1.6. Risk management objectives and policies ............................................................................91.6.1. Risk Management Framework ..................................................................................... 9
1.6.2. Risk Appetite Statement ............................................................................................. 10
1.6.3. Risk Culture ............................................................................................................... 10
1.7. Declaration of the Management Body ................................................................................11
2. Governance - Board and Committees ........................................................................................112.1. The Board of Directors .......................................................................................................112.2. Number of Directorships held by members of the Board ...................................................112.3. Policy on Recruitment ........................................................................................................122.4. Policy on Diversity .............................................................................................................122.5. Governance Committees.....................................................................................................12
2.6 Other Governance Functions ...............................................................................................142.7. Information flow on risk to the management body ............................................................15
3. Own Funds .................................................................................................................................16
3.1. Tier 1 & Tier 2 Regulatory Capital ....................................................................................16
3.2. Main features of Common Equity Tier 1, Additional Tier 1 and Tier 2 instruments .........18
3.3. Balance Sheet Reconciliation .............................................................................................18
4. Compliance with Regulatory Capital and the overall Pillar II Rule ..........................................194.1. Internal Capital ...................................................................................................................194.2. Approach to assessing adequacy of Internal Capital ..........................................................19
4.3. Recovery and Resolution plans ..........................................................................................20
5. Pillar I Capital Requirements ....................................................................................................20
5.1. Credit Risk ..........................................................................................................................20
5.1.1. Credit risk adjustments ............................................................................................... 20
5.1.2. Credit Risk – Risk Weighted Assets .......................................................................... 21

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
5.1.3. Credit Risk – Analysis of Average exposures and total amount of exposures after
accounting offsets................................................................................................................. 22
5.1.4. Credit Risk – Risk Weighted Assets by Geographical distribution of the exposure
classes ................................................................................................................................... 22
5.1.5. Credit Risk – Distribution of exposures by industry .................................................. 23
5.1.6 Residual maturity broken down by exposure classes .................................................. 23
5.2. Use of ECAIs ......................................................................................................................24
5.2.1. Credit Risk exposures by credit quality step pre and post credit risk mitigation ....... 25
5.3. Securitisations .....................................................................................................................25
5.4. Counterparty Credit Risk ....................................................................................................25
5.5. Market Risk ........................................................................................................................26
5.5.1. Equity Risk ................................................................................................................. 27
5.5.2. Foreign Exchange Risk .............................................................................................. 28
5.5.3. Commodities Risk ...................................................................................................... 28
5.5.4. Interest Rate Risk ....................................................................................................... 29
5.6. Operational Risk .................................................................................................................29
6. Leverage Ratio ...........................................................................................................................29
7. Other Risks ................................................................................................................................30
7.1. Concentration Risk .............................................................................................................30
7.2. Reputation Risk ..................................................................................................................30
7.3. Strategic Risk ......................................................................................................................30
7.4. Business Risk ......................................................................................................................31
7.5. Capital Risk Management ..................................................................................................31
7.6. Regulatory Risk ..................................................................................................................31
7.7. Legal and Compliance Risk ................................................................................................31
7.8. IT Risk ................................................................................................................................32
7.9. Risk Reporting ....................................................................................................................32
7.10. Liquidity Risk ...................................................................................................................32
8. Remuneration policy..................................................................................................................32
8.1. Remuneration System .........................................................................................................33
8.2. Performance Appraisal .......................................................................................................34
8.3. Remuneration of Senior Management Personnel and Directors ........................................34

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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1. Overview
1.1 CIF Information
GBE Brokers Ltd (ex. GBE Safepay Transactions Ltd) (hereinafter, the “Company”) was
incorporated in the Republic of Cyprus on 5 August 2013 as a limited liability company withregistration number HE 324205 and it is a Cyprus Investment Firm (hereinafter “CIF”). The
Company was licensed by the Cyprus Securities and Exchange Commission (hereinafter the“CySEC”) with number CIF 240/14 to provide financial services, on 27 June 2014 and thelicence was activated on 23 June 2015.
Table 1 below illustrates the current licence information of the Company:
Table 1 - Company Licence Information (based on the Third Appendix of theLaw144(I)/2007, as amended)
Investment Services and Activities
Ancillary Services
1
2
3
4
5
6
7
8
1
2
3
4
5
6
  
 
1





2
  
 
3
 
  
4
  
 
5

  
 
6
  
 
7
  
 
8





9
 
10   
Financial Instruments

7-

The Company is authorised to provide the following Investment Services, in accordance withPart Ι of the Third Appendix of the Law 144(Ι)/2007, as amended:
1. Reception and transmission of orders in relation to one or more financial instruments
2. Execution of orders on behalf of clients
3. Dealing on own account
The Company is authorised to provide the following Ancillary Services, in accordance with Part
ΙI of the Third Appendix of the Law 144(Ι)/2007, as amended:
1. Safekeeping and administration of financial instruments for the account of clients,
including custodianship and related services such as cash/collateral management
2. Granting credits or loans to one or more financial instruments, where the firm granting
the credit or loan is involved in the transaction
3. Foreign exchange services where these are connected to the provision of investment
services
The Company is authorised to provide the aforementioned investment and ancillary services, asapplicable for each service, for the following Financial Instruments, in accordance with Part IIIof the Third Appendix of the Law 144(Ι)/2007, as amended:
1. Transferable Securities
2. Money Market Instruments
3. Units in Collective Investment Undertakings
4. Options, futures, swaps, forward rate agreements and any other derivative contracts relating
to securities, currencies, interest rates or yields, or other derivatives instruments, financial
indices or financial measures which may be settled physically or in cash.
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

4Pillar III Disclosures Report 20175.

Options, futures, swaps, forward rate agreements and any other derivative contracts relating
to commodities that must be settled in cash or may be settled in cash at the option of one ofthe parties (otherwise than by reason of a default or other termination event).
6. Options, futures, swaps, and any other derivative contract relating to commodities that canbe physically settled provided that they are traded on a regulated market or/and an MTF
7. Options, futures, swaps, forwards and any other derivative contracts relating tocommodities, that can be physically settled not otherwise mentioned in point 6 of Part III
and not being for commercial purposes, which have the characteristics of other derivative
financial instruments, having regard to whether, inter alia, they are cleared and settled
through recognised clearing houses or are subject to regular margin calls
8. Derivative instruments for the transfer of credit risk
9. Financial contracts for differences
10. Options, futures, swaps, forward rate agreements and any other derivative contracts relating
to climatic variables, freight rates, emission allowances or inflation rates or other official
economic statistics that must be settled in cash or may be settled in cash at the option of oneof the parties (otherwise than by reason of a default or other termination event), as well as
any other derivative contract relating to assets, rights, obligations, indices and measures nototherwise mentioned in this Part, which have the characteristics of other derivative financial
instruments, having regard to whether, inter alia, they are traded on a regulated market or an
MTF, are cleared and settled through recognised clearing houses or are subject to regularmargin calls.
Moreover, the Company is categorised as “Full Scope” CIF with minimum/initial capitalrequirement of €730,000.
1.2. Scope of application
The Company is publishing the disclosures on an individual (solo) basis.
Annual Reports and Financial Statements are prepared in accordance with International Financial
Reporting Standards (IFRS) and the provisions of the Cyprus Company Law, Cap. 113.
1.3. Organisational Structure

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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1.4. Regulatory framework overview
This report has been prepared in accordance with Section 4 (Paragraph. 32) of the CySEC
Directive DI144-2014-14 of 2014 (the “Directive”) for the prudential supervision of investment
firms which implements the Regulation 575/2013 (the “Regulation” or “CRR”) and theEuropean Directive 2013/36/EU (the “European Directive” or “CRD IV”), as well as the relevant
provisions of Law 144(I)/2007, as amended (hereinafter, the “Law”). It is noted that the Law has
been replaced by Law 87(I)/2017 for the purpose of harmonization with European Directive 2
2014/65/EU (“MIFID II”) which applies to Cypriot investment firms (CIFs), market operators,
data reporting service providers (DRSP), and third-country firms providing investment services
or activities through the establishment of a branch in the Republic as of 3 January 2018.
CRR establishes the prudential requirements for capital, liquidity and leverage that entities needto abide by. Furthermore, CRR introduces significant changes in the prudential regulatory
regime applicable to institutions including amended minimum capital ratios, changes to thedefinition of capital and the calculation or risk weighted assets and the introduction of new
measures relating to leverage, liquidity and funding. Additionally, CRR permits a transition
period for certain of the enhanced capital requirements and certain other measures, such as theleverage ratio, which are not expected to be fully implemented until 2018. CRR is immediately
binding on all EU member states. CRD IV governs access to internal governance arrangements
including remuneration, Board of Directors (the “Board”) composition and transparency.
Capital Buffers
CRD IV is transposed into national laws, which allows national regulators to impose additional
capital buffer requirements. Based on the provisions of the Macroprudential oversight ofInstitutions Law of 2015 which came into force on 1 January 2016, the CBC is the designatedAuthority responsible for setting the macroprudential buffers that derive from the CRD IV.
In accordance with the provisions of this law, the CBC sets, on a quarterly basis, theCountercyclical Capital Buffer (the “CCyB”) level in accordance with the methodology
described in this law. The CCyB is effective as from 1 January 2016 and is determined by the
CBC ahead of the beginning of each quarter. The CBC has set the level of the CCyB rate for
Cyprus at 0% for 2017.
In addition, CIFs are required to maintain an institution specific CCyB equivalent to their total
risk exposure amount multiplied by the weighted average of the countercyclical buffer rates. At
present, based on ESRB and BIS data, the countries that have adopted a positive countercyclicalcapital buffer rate are the Hong Kong Special Administrative region equal to 1.875%, Sweden
equal to 2.0%, Norway equal to 2%, the Czech Republic equal to 0.5%, Iceland equal to 1.25%
and Slovakia equal to 0.5%.
According to paragraph 52(2) of the Directive, the Macroprudential Authority may exempt small
and medium sized CIFs from holding an institution specific CCyB, in addition to their CET 1
Capital. Based on the assessment made, using the latest financial data available, theMacroprudential Authority has decided that the Company meets the definition of a small andmedium CIF and thus is exempted from the requirement to maintain an institution specific
CCyB.
Further to the above, the Macroprudential Authority has decided to activate the capitalconservation buffer (the “CCB”) having exercised its power. The CCB will be phased-in
gradually, starting from 1 July 2016 at 0.625% and increasing by 0.625% every year thereafter,
until being fully implemented (2.5%) on 1 January 2019. The Company is obligated to maintainGBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

6Pillar III Disclosures Report 2017
a 1.875% CCB in addition to the CET1 capital maintained for the year 2018 to meet the own
funds requirement imposed by Article 92 of the CRR.
The Macroprudential Oversight of Institutions Law, 2015, also requires the maintenance ofadditional capital buffer by the systemically important credit institutions and investment firms
either at the national level, or at the EU level, referred to as Other Systemically Important
Institutions (“O-SII”).
The O-SII capital buffer reflects the cost for an institution of being systemically important andreduces the moral hazard from the support of the institution from the state and the taxpayers andcompensates for the higher risk it represents for the national financial system and the potential
consequences of its failure. The Company is not obliged to maintain an O-SII capital buffer as it
is not an O-SII institution.
The Cyprus Macroprudential Authority (Central Bank of Cyprus) decided the adoption of amacroprudential measure adopted by Estonia. This measure constitutes a 1% systemic risk bufferrate, applied in accordance with Article 134 of Directive 2013/36/EU, on all exposures located in
Estonia of CIFs incorporated in the Republic of Cyprus and offering the investment service of
dealing on own account and /or underwriting of financial instruments and/or placing of financial
instruments on a firm commitment basis. Moreover, CySEC informed the CIFs about the
aforementioned measure through the Circular C222 dated July 7, 2017. Consequently, CIFs with
exposures located in Estonia must comply with the decision of the Central Bank of Cyprus whencalculating their Capital Requirements. As at 31 December 2017, there were no exposures in
Estonia, thus no additional capital requirement was maintained.
The Regulatory framework consists of a three “Pillar” approach:Pillar I establishes minimum capital requirements, defines eligible capital instruments,
and prescribes rules for calculating RWA.



Pillar II requires firms and supervisors to take a view on whether a firm should holdadditional capital against risks considered under Pillar I that are not fully captured by the
Pillar I process (e.g. credit concentration risk); those risks not taken into account by the
Pillar I process (e.g. interest rate risk in the banking book, business and strategic risk);
and factors external to the firm (e.g. business cycle effects). Pillar II connects theregulatory capital requirements to the Company’s Internal Capital Adequacy Assessment
Process (“ICAAP”) and to the reliability of its internal control structures. The function of
Pillar II is to provide communication between supervisors and institutions on acontinuous basis and to evaluate how well the institutions are assessing their capitalneeds relative to their risks. If a deficiency arises, prompt and decisive action is taken to
restore the appropriate relationship of capital to risk.



Pillar III - Market Discipline requires the disclosure of information regarding the risk
management policies of the Company, as well as the results of the calculations ofminimum capital requirements, together with concise information as to the compositionof original own funds.

According to the Directive, the risk management disclosures should be included in either thefinancial statements of the CIFs if these are published, or on their websites. The Pillar III
disclosure requirements are contained in Articles 431 to 455 of the Regulation. In addition, these
disclosures must be verified by the external auditors of the CIF. The CIF will be responsible tosubmit its external auditors’ verification report to CySEC. The Company has included its risk
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

7Pillar III Disclosures Report 2017
management disclosures as per the Directive on its website as it does not publish its financial
statements. Verification of these disclosures has been made by the external auditors and sent to
CySEC.
1.5. Disclosure Policy: Basis and Frequency of Disclosure / Location and verification
The Company has a formal policy, approved by the Board, which details its approach incomplying fully with the Pillar 3 disclosure requirements as laid out in Part Eight of the CRR.
1.5.1. Information to be disclosed
The Regulation provides that institutions may omit one or more disclosures, if such disclosures
are not regarded as material, except for the following disclosures: Regarding the policy on diversity with regard to selection of members of the management
body, its objectives and any relevant targets set out in that policy, and the extent to whichthese objectives and targets have been achieved (Article 435(2)(c) of CRR).
 Own funds (Article 437 of CRR).
 Remuneration policy (Article 450 of CRR).
Materiality of Disclosures
Materiality is based on the criterion that the omission or misstatement of information would be
likely to change or influence the decision of a reader relying on that information for the purposeof making economic decisions. Where the Company has considered a disclosure to beimmaterial, this was not included in the document.
Disclosures and Confidential Information
The Regulation also provides that institutions may omit one or more disclosures, if suchdisclosures are regarded as confidential or proprietary. The CRR defines proprietary as if sharingthat information with the public would undermine its competitive position. It may include
information on products or systems which, if shared with competitors, would render an
institution’s investments therein less valuable. Information is regarded as confidential if there are
obligations to customers or other counterparty relationships binding an institution toconfidentiality. Under the light of the above, the Company avoided to disclose such confidential
information in this report.
1.5.2. Frequency
The Company’s policy is to publish the disclosures required on an annual basis. The frequency
of disclosure will be reviewed should there be a material change in approach used for the
calculation of capital, business structure or regulatory requirements.
1.5.3. Medium and location of publication
Institutions may determine the appropriate medium, location and means of verification to comply
effectively with the disclosure requirements. In this respect, the Company’s Pillar III disclosures
are published on the Company’s websites:

www.gbebrokers.com
www.gbeprime.com

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

8Pillar III Disclosures Report 2017
1.5.4. Verification
The Company’s Pillar III disclosures are subject to internal review and validation prior to being
submitted to the Board for approval. The Company’s Pillar III disclosures have been reviewed
and approved by the Board. In addition, the Remuneration disclosures have been reviewed by the
Risk Management Committee.

1.6. Risk management objectives and policies
To ensure effective risk management, the Company has adopted the Three Lines of Defence
model, with clearly defined roles and responsibilities.
First Line of Defence: Managers are responsible for establishing an effective control framework
within their area of operation and identifying and controlling all risks so that they are operating
within the organisational risk appetite and are fully compliant with Company’s policies andwhere appropriate defined thresholds. First Line of Defence acts as an early warning mechanism
for identifying (or remedying) risks or failures.
Second Line of Defence – The Risk Management Function is responsible for proposing to theBoard appropriate objectives and measures to define the Company’s risk appetite and fordevising the suite of policies necessary to control the business including the overarchingframework and for independently monitoring the risk profile, providing additional assurance
where required. The Risk Management Function will leverage their expertise by providing
frameworks, tools and techniques to assist management in meeting their responsibilities, as wellas acting as a central coordinator to identify enterprise wide risks and make recommendations toaddress them. Integral to the mission of Second Line of Defence is identifying risk areas,
detecting situations/activities, in need of monitoring and developing policies to formalise risk
assessment, mitigation and monitoring.
Third Line of Defence - Comprises by the Internal Audit Function which is responsible forproviding assurance to the Board on the adequacy of design and operational effectiveness of thesystems of internal controls. Internal Audit undertakes on-site inspections/visits to ensure that the
responsibilities of each Function are discharged properly (i.e. soundly, honestly andprofessionally) as well as reviews the Company’s relevant policies and procedures. Internal
Audit works closely with both the First and Second Lines of Defence to ensure that its findings
and recommendations are taken into consideration and followed, as applicable.
1.6.1. Risk Management Framework
Managing risk effectively in a Company operating in a continuously changing risk environment,
requires a strong risk management culture. As a result, the Company has established an effective
risk oversight structure and the necessary internal organisational controls to ensure that theCompany undertakes the following:The adequate risk identification and management
The establishment of the necessary policies and procedures
The setting and monitoring of the relevant limits andCompliance with the applicable legislation

The Board meets on a regular basis, and receives updates on risk and regulatory capital mattersfrom management. The Board reviews regularly (at least annually) written reports concerning
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

9Pillar III Disclosures Report 2017
compliance, risk management and internal audit policies, procedures and work as well as theCompany’s risk management policies and procedures as implemented by Management.
As part of its business activities, the Company faces a variety of risks, the most significant of
which are described further below. The Company holds regulatory capital against three allencompassing main types of risk: credit risk, market risk and operational risk.
1.6.2. Risk Appetite Statement
Risk Appetite is the amount and type of risk that the Company is able and willing to accept in
pursuing its business objectives. Risk appetite is expressed in both quantitative and qualitative
terms and covers all risks, both on-balance sheet and off-balance sheet.
An effective risk appetite statement is empowering in that it enables the decisive accumulation ofrisk in line with the strategic objectives of the Company while giving the Board and management
confidence to avoid risks that are not in line with the strategic objectives.
The Company has established a robust Risk Appetite Framework. The Board expresses the Risk
Appetite through a number of key measures which define the level of risk acceptable across three
categories:
Table 2 - Risk Appetite areas
Risk Area
Risk Types
Financial Credit Risk
 Market Risk
 Liquidity Risk
Reputational
 Conduct Risk
 Customer Risk
 Regulatory Risk
 External reputational Risk
Operational & People
The risk associated with the failure of key processes or systems
and the risks of not having the right quality and quantity ofpeople to operate those processes
The Risk Appetite framework has been designed to create links to the strategic long term plan,
capital planning and the Company’s risk management framework.
The Board approves the Company’s corporate strategy, business plans, budget, long term planand ICAAP. The Company employs hedging and mitigation techniques defined within the
Company’s policies, to ensure risks are managed within Risk Appetite.
1.6.3. Risk Culture
Risk culture is a critical element in the Company’s risk management framework and procedures.
Management considers risk awareness and risk culture within the Company as an important partof the effective risk management process. Ethical behaviour is a key component of the strongrisk culture and its importance is also continuously emphasised by the management.
The Company is committed to embedding a strong risk culture throughout the business where
everyone understands the risks they personally manage and are empowered and qualified to takeaccountability for them. The Company embraces a culture where each of the business areas isencouraged to take risk–based decisions, while knowing when to escalate or seek advice.
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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1.7. Declaration of the Management Body
The Board is responsible for reviewing the effectiveness of the Company’s risk management
arrangements and systems of financial and internal control. These are designed to manage rather
than eliminate the risks of not achieving business objectives, and – as such – offer reasonable but
not absolute assurance against fraud, material misstatement and loss. The Board considers that it
has in place adequate systems and controls with regard to the Company’s profile and strategy
and an appropriate array of assurance mechanisms, properly resourced and skilled, to avoid or
minimise loss.
2. Governance - Board and Committees
The Company’s systems of risk management and internal control include risk assessment,
management or mitigation of risks, including the use of control processes, information andcommunication systems and processes for monitoring and reviewing their continuing
effectiveness.
The risk management and internal control systems are embedded in the operations of theCompany and are capable of responding quickly to evolving business risks, whether they arise
from factors within the Company or from changes in the business environment.

2.1. The Board of Directors
The Board has the overall responsibility for the establishment and oversight of the Company’s
Risk Management Framework. The Board satisfies itself that financial controls and systems ofrisk management are robust. The Board comprises of two executive directors and two
independent non-executive directors.
The Company has in place the Internal Operations Manual which lays down the activities,
processes, duties and responsibilities of the Board, Committees, Senior Management and staff
constituting the Company.
The Company implements and maintains adequate risk management policies and procedures
which identify the risks relating to the Company’s activities, processes and systems, and whereappropriate, set the level of risk tolerated by the Company. The Company adopts effective
arrangements, processes and systems, in light of that level of risk tolerance, where applicable.

2.2. Number of Directorships held by members of the Board
All members of the Board commit sufficient time to perform their functions in the Company.
The number of directorships which may be held by a member of the Board at the same time shalltake into account individual circumstances and the nature, scale and complexity of theCompany’s activities. Unless representing the Republic, members of the Board of a CIF that issignificant in terms of its size, internal organisation and the nature, the scope and the complexityof its activities shall not hold more than one of the following combinations of directorships at thesame time:

one executive directorship with two non-executive directorships;
four non-executive directorships.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017

For the purposes of the above, the following shall count as a single directorship:Executive or non-executive directorships held within the same group.

Directorships in organisations which do not pursue predominantly commercial objectives such as
non-profit or charitable organisations shall not count for the purposes of the above guidelines.
The table below discloses the number of directorships held by members of the management
body.
Table 3 - Number of Directorships of the members of the Board of Directors
Director
Function
Number of
Number of
Executive
Non-Executive
Directorships Directorships
Mr. Rifat Sayim
Executive Director
10
Mr. Niklas Neubauer*
Executive Director
10
Ms. Olga Kvasova
Independent, Non-Executive
0
1
Director
Mr. Christos Avgoustinos
Independent, Non-Executive
1
4
Director*Mr. Niklas Neubauer replaced Mr.Yiannis Kameris who resigned on 25 October 2017

2.3. Policy on Recruitment
Recruitment into the Board combines an assessment of both technical capability and competency
skills referenced against the Company’s leadership framework.
Members of the Board shall possess sufficient knowledge, skills and experience to perform theirduties. The overall composition of the Board shall reflect an adequately broad range ofexperiences to be able to understand the CIF’s activities, including the main risks to ensure thesound and prudent management of the Company as well as sufficient knowledge, of the legal
framework governing the operations a CIF.

2.4. Policy on Diversity
The Company is committed to promoting a diverse and inclusive workplace at all levels,reflective of the communities in which it does business. It approaches diversity in the broadest
sense, recognizing that successful businesses flourish through embracing diversity into theirbusiness strategy, and developing talent at every level in the organisation.

2.5. Governance Committees
Risk Management Committee
In order to support effective governance and management of the wide range of responsibilities
the Board has established the Risk Management Committee. The role of the Risk Management
Committee is to provide oversight, review and challenge of the material risks both current andfuture affecting the business whilst ensuring that there is effective management and control of all

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

12Pillar III Disclosures Report 2017
key risks and issues facing the Company. The members of the Risk Management Committee areshown in the table below:
Table 4 - Risk Management Committee
Member Name
Function
Mr. Danny Stadermann
Money Laundering Compliance Officer, Germany Branch, fulltime, DE-based
Mr. Christos Avgoustinos Independent Non-Executive Director
MAP S.Platis
Risk Manager (ex officio and without any voting rights)
The Risk Management Committee, inter alia, scrutinizes, and decides on various risks inherent
with the operation of the Company with the view to formulate internal policies and measure theperformance of the said policies in dealing with the risks associated with the operation of theCompany. Moreover, the Risk Management Committee reviews the risk management proceduresin place (monitors and controls the Risk Manager in the performance of his/her duties and theeffectiveness of the Risk Management Department).
The Risk Management function operates independently and monitors the adequacy andeffectiveness of policies and procedures, the level of compliance to those policies andprocedures, in order to identify deficiencies and rectify. The Risk Management Committee is
responsible for monitoring and controlling the Risk Manager in the performance of his/herduties.
The Risk Management Committee meets at least annually, unless the circumstances require
extraordinary meetings. Extraordinary meetings can be called by any member of the Risk
Management Committee, as well as by the Risk Manager.

Investment Committee
An Investment Committee has been formed to ensure the implementation of a prudent
investment policy and the monitoring of the provision of adequate investment services to Clients.
The Investment Committee reports directly to the Senior Management and its members areshown in the table below:
Table 5 - Investment Committee
Member Name
Function
Mr. Rifat Sayim
Managing Director, Executive Director, part of “4Eyes”,full-time,CY-based
Mr. Niklas Neubauer
General Manager, Executive Director, part of “4-Eyes”,fulltime,CY-based
Mr. Valantis Charalambous
Head of Brokerage Department (full time, CY-based)
The Investment Committee is responsible, inter alia:(a) to supervise the proper choice of investments (framework for investment decisions)(b) to analyze the investment potential and contribute to the elaboration of the investment policy,
as applicable(c) to determine the Company’s pricing policy(d) to decide upon the markets and types of Financial Instruments in which the Company shall be
active(e) to determine the mode, content and frequency of the Client’s briefing.
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017(f) to brief the Internal Auditor, as applicable(g) to analyze the economic conditions and the investment alternatives based on a thoroughexamination of third party reports(h) to annually review the established dealing on own account policy and to use therecommendations of the Head of the Dealing on Own Account Department. Such a review shallalso be carried out whenever a material change occurs.

2.6 Other Governance Functions
Internal Audit
The Company, taking into account the nature, scale and complexity of its business activities, aswell as the nature and the range of its investment services and activities, establishes andmaintains an internal audit function through the appointment of a qualified and experienced
Internal Auditor. The Internal Auditor is appointed and reports to the Senior Management andthe Board of the Company.
The Internal Auditor is separated and independent of the other functions and activities of theCompany. The Internal Auditor bears the responsibility to:(a) establish, implement and maintain an audit plan to examine and evaluate the adequacy andeffectiveness of the Company’s systems, internal control mechanisms and arrangements(b) issue recommendations based on the result carried out in accordance with point (a)(c) verify compliance with the recommendations of point (b)(d) provide timely, accurate and relevant reporting in relation to internal audit matters to theBoard and the Senior Management of the Company, at least annually.
The Internal Auditor is responsible for applying the Internal Control System (hereinafter, the“ICS”), which confirms the accuracy of the reported data and information. Furthermore, the roleof the Internal Auditor is the programming, on an at least annual basis (as applicable), of checks
on the degree of application of the required ICS.
The Internal Auditor has clear access to the Company’s personnel and books. Likewise, theCompany’s employees have access to the Internal Auditor for the reporting of any significant
deviations from the guidelines provided.
The Board ensures that internal audit issues are considered when presented to it by the Internal
Auditor and appropriate actions shall be taken. The Board ensures all issues are dealt with andprioritized according to the Board’s assessment.

Compliance Officer
The Board ensures regulatory compliance through a comprehensive and pro-active compliancestrategy. To this end, the Board appoints a Compliance Officer in order to establish, implement
and maintain adequate and effective policies and procedures, as well as appropriate systems andcontrols designed to detect any risk of failure by the Company to comply with its obligations.
Further to this, the Compliance Officer is responsible to put in place adequate measures andprocedures designed to minimize such risk and to enable the competent authorities to exercise
their powers effectively. The Compliance Officer reports to the Board of the Company.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
The Compliance Officer is independent and has the necessary authority, resources, expertise andaccess to all relevant information.
The major objectives of the Compliance officer are:(a) liaising with all relevant business and support areas within the Company(b) monitoring and assessing the level of compliance risk that the Company faces, taking into
account the investment and ancillary services provided, as well as the scope of financial
instruments traded and distributed(c) monitoring the adequacy and effectiveness of the measures and procedures of the Company(d) advising and assisting the relevant persons responsible for carrying out the investment
services to be in compliance with the Law

Anti-Money Laundering Compliance Officer
The Board retains a person to the position of the Company’s Anti-Money Laundering
Compliance Officer (hereinafter the “AMLCO”) to whom the Company's employees report theirknowledge or suspicion of transactions involving money laundering and terrorist financing. The
AMLCO belongs to the higher hierarchical levels/layers of the Company so as to command thenecessary authority.
The AMLCO leads the Company’s Anti-Money Laundering Compliance procedures andprocesses and report to the Senior Management and the Board of the Company.
Scope and objectives of the AMLCO:a) The improvement of mechanisms used by the Company for counteraction of legalization(laundering) of criminally earned incomeb) To decrease the probability of appearance among the Customers of the Company of any
persons/organizations engaged in illegal activity and/or related with such persons/organizationsc) To minimize the risk of involvement of the Company in any unintended holding andrealization of operations with any funds received from any illegal activity or used for its
financingd) To ensure compliance with anti-money laundering laws and directives issued by CySec aswell as the identification and proper reporting of any money laundering activity to the relevant
authorities

2.7. Information flow on risk to the management body
Risk information flows up to the Board directly from the business departments and control
functions. The Board ensures that it receives on a frequent basis, at least annually written reports
regarding Internal Audit, Compliance, Money Laundering and Terrorist Financing and Risk
Management issues and approves the Company’s ICAAP report as shown in the table below:

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
Table 6 - Information flow on risk to management body
Report Name
Owner of Report
Recipient
1 RiskManagement Risk Manager
CySEC, Board
Report
2 ICAAP Report
Risk Manager
CySEC, Board
3 Compliance ReportCompliance Officer CySEC, Board
4 Internal
Audit Internal Auditor
CySEC, Board
Report5

Anti-money
laundering report

6

Investment
Committee decisions

Anti-money
laundering
Compliance Officer
Risk Manager

Frequency
AnnualCySEC, Board

AnnualAnnualAnnualormorefrequent
upon
management request
Annual

Board

Upon request

Furthermore, the Company believes that the risk governance processes and policies are of utmost
importance for its effective and efficient operation. The processes are reviewed and updated on
an annual basis or when deemed necessary and are approved by the Board.
3. Own Funds
Own Funds (also referred to as capital resources) is the type and level of regulatory capital thatmust be held to enable the Company to absorb losses. The Company is required to hold own
funds in sufficient quantity and quality in accordance with CRD IV which sets out thecharacteristics and conditions for own funds.
The Company throughout the year under review managed its capital structure and madeadjustments to it in light of the changes in the economic and business conditions and the risk
characteristics of its activities. During the 12 month accounting period to 31 December 2017 theCompany complied fully with all capital and liquidity requirements and operated well within theregulatory requirements.
The Total Capital Ratio of the Company as at 31 December 2017 was 12.98% which is above theminimum of 8%. The minimum Total Capital Ratio (i.e. 8%) was maintained by the Company
during the year.

3.1. Tier 1 & Tier 2 Regulatory Capital
Institutions shall disclose information relating to their own funds. Furthermore, institutions shalldisclose a description of the main features of the Common Equity Tier 1 and Additional Tier 1
instruments and Tier 2 instruments issued by the institution. In this respect, the Company’s Tier
1 capital is wholly comprised of Common Equity Tier 1 Capital.
The composition of the capital base and capital ratios of the company are shown in the following
table:

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
Table 7- Composition of the capital base and capital ratios

Capital Instruments
Common Equity Tier 1 (CET1) capital: instruments andreserves
Capital instruments and the related share premium accounts
Retained earnings
Common Equity Tier 1 (CET1) capital before regulatory
adjustments
Common Equity Tier 1 (CET1) capital: regulatory
adjustments
Additional deductions of CET1 Capital due to Article 3 of theCRR (*)
Other intangible assets
Total regulatory adjustments to Common Equity Tier 1(CET1)
Common Equity Tier 1 (CET1) capital
Additional Tier 1 (AT1) capital
Tier 1 capital (T1 = CET1 + AT1)
Tier 2 (T2) capital
Total capital (TC = T1 + T2)
Risk weighted assets
Credit risk
Market risk
Operational risk
CVA
Total risk weighted assets

Current
period
€000
1,790

Full
impact
€000
1,790

1,016
774
1,790

1,016
774
1,790

(74)

(74)

(62)

(62)

(12)
(74)

(12)
(74)

1,716
1,716
1,716

1,716
1,716
1,716

2,613
6,220
4,353
34
13,221

2,613
6,220
4,353
34
13,221

Capital ratios and buffers
Common Equity Tier 1
12.98%
12.98%
Tier 1
12.98%
12.98%
Total Capital
12.98%
12.98%
Institution specific buffer requirement (CET1 requirement in
5.75%
7%accordance with article 92 (1)(a) plus capital conservation andcountercyclical buffer requirements, plus systemic risk buffer, plus
the systemically important institution buffer (G-SII or )-SII
buffer), expressed as a percentage of risk exposure amount)of which: capital conservation buffer requirement
1.25%
2.5%
of which: counter cyclical buffer requirement(**)
of which: systemic risk buffer requirementof which: Global Systemically Important Institution (G-SII)
or Other Systemically Important Institution (O-SII) buffer
CET1 available to meet buffers(***)
4.98%
4.98%
* Treatment pursuant to Circular C162 (Capital adequacy requirements - Change in thetreatment of the Investors Compensation Fund (“ICF”) Contribution) on 10 October 2016,
according to which the contribution to ICF will no longer be risk weighted as an “exposure to
public sector entities” pursuant to paragraph 13(3) of Directive DI144-2014-15. The said ICF
exposure will be deducted from CET1 Capital pursuant to Article 3 (Application of stricter
requirements by institutions) of the CRR. The aforementioned Article gives the member states the
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
power to request from the institutions to hold own funds in excess of those required by the CRR.
** The Company is exempted from the countercyclical buffer requirement for 2017.
*** Common Equity Tier 1 available to meet buffers (as a percentage of risk weighted assets).
3.2. Main features of Common Equity Tier 1, Additional Tier 1 and Tier 2 instruments
In order to meet the requirements for disclosure of the main features of these instruments, thecompany discloses the capital instruments’ main features as outlined below:
Table 8 - Main features of capital instruments
Capital Instruments Main Feature
IssuerRegulatory Treatment
Eligible at Solo/(sub-)consolidated/solo
Instrument type
Amount recognized in regulatory capital
Nominal amount of instrument
Issue Price
Accounting classification
Original date of issuance

CET1
GBE Brokers Ltd
Solo
Common Equity€1,016k€1,016k
Various
Shareholders’ Equity€1k
Incorporation Date
€1,000k 04/08/2014€15k
24/10/2014
PerpetualNo maturity
No

Perpetual or dated
Original maturity dateIssuer call subject to prior supervisory approval
Coupons / dividends
Fixed or floating dividend/coupon
Floating
Coupon rate and any related index
N/A
The Company’s capital resources consist of CET1 Capital. No additional Tier 1 or Tier 2 Capital
available.
3.3. Balance Sheet Reconciliation
Institutions shall disclose a full reconciliation of Common Equity Tier 1 items, Additional Tier 1
items, Tier 2 items, filters, deductions and the balance sheet in the audited financial statements of
the institution as follows:
Table 9 - Balance Sheet Reconciliation
2017
€000
EquityShare capital
Share premium
Retained earnings
Total Equity as per the Audited Financial Statements

11
1,005
774
1,790

Regulatory Deductions
Additional deductions of CET1 Capital due to Article 3 of the CRR
Other Intangibles Assets
Total Regulatory Deductions

(62)
(12)
(74)

Total Own funds as per the CoRep Forms

1,716

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
4. Compliance with Regulatory Capital and the overall Pillar II Rule4.1. Internal Capital
The purpose of capital is to provide sufficient resources to absorb unexpected losses over andabove the ones that are expected in the normal course of business. The Company aims tomaintain a minimum risk asset ratio which will ensure there is sufficient capital to support theCompany during stressed conditions.
4.2. Approach to assessing adequacy of Internal Capital
The Company has established an ICAAP, documented it in a Manual and produced in this regard
the ICAAP Report, as per the Guidelines GD-IF-02 (Circular C026) & GD-IF-03 (CircularC027). Upon CySEC’s request the ICAAP Report shall be submitted to CySEC.
The Company operates a fully integrated ICAAP process throughout the year that rolls into thefinal ICAAP assessment. The Company also performs monthly key risk assessments supported
by periodic stress testing. The ICAAP process considers all of the risks faced by the Company,
the likely impact of them if they were to occur, how these risks can be mitigated and the amountof capital that it is prudent to hold against them both currently and in the future.
The ICAAP Report describes how the Company implemented and embedded its ICAAP within
its business. The ICAAP also describes the Company’s Risk Management framework e.g. theCompany’s risk profile and the extent of risk appetite, the risk management limits if any, as wellas the adequate capital to be held against all the risks (including risks other than the Pillar I risks)
faced by the Company.
The Company has adopted the Pillar I plus approach whereby it determines the minimum capitalrequired under Pillar I methodology and subsequently incorporates in that methodology the risks
that are either not covered or are partially covered by Pillar I. Initially an assessment is made on
the general financial position of the Company both from its financial statements and its Capital
Adequacy Returns.
The Pillar I variable capital requirement is the sum of the credit risk and market risk
requirements and the operational risk. In order to validate the adequacy of the above
requirements under the Pillar I calculations, the ICAAP proceeds with the following individual
tests:
The adequacy of the credit and market risk requirements is assessed with reference to all
relevant balance sheet items in order to ascertain if there are additional risks that are notcovered by Pillar IOther risks connected with the balance sheet, such as liquidity risk and concentration
risk, are reviewed in order to establish whether there should be an additional requirementthat might not be covered under Pillar IThe overall capital adequacy is tested by adding together the resulting requirement of theidentified risks.

The absolute impact of combinations of scenarios, including a severe market downturn, is
considered in relation to the financial forecasts of the business to assess the potential
impact on the capital base over a three year period (forward-looking).

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
A comprehensive risk assessment is carried out for all risks, categorizing them under arisk profile by attributing the anticipated impact and likelihood of occurrence.

Finally, additional measures are set for the mitigation of the identified risks as well as
capital allocation.

4.3. Recovery and Resolution plans
The Company is in the process to prepare a recovery plan according to the Law 20(I)/2016 forthe recovery of CIFs and other entities under the supervision of CySEC and pursuant to the
Directive 2014/59/EU of the European Parliament and the Council establishing a framework forthe recovery and resolution of credit institutions and investment firms (“BRRD”). The BRRD
establishes a three-stage mechanism (Preparation, Early Intervention and Resolution) for the
management of insolvency situations.
All CIFs that are categorised as ‘’Full Scope’’ are required to establish a recovery plan in order
to be prepared for possible financial difficulties and restore their viability in a timely manner
during periods of financial distress. These Recovery Plans are included in the first step ofpreparation which needs to include a range of recovery options to deal with severe financial
stress scenarios.
5. Pillar I Capital Requirements
The following tables show the overall Pillar I minimum capital requirement and risk weighted
assets for the Company under the Standardised Approach to Credit Risk, Market Risk and the
Basic Indicator Approach for the Operational Risk.
5.1. Credit Risk
In the ordinary course of business, the Company is exposed to credit risk, which is monitored
through various control mechanisms. Credit risk arises when a failure by counterparties todischarge their obligations could reduce the amount of future cash inflows from financial assets
on hand at the balance sheet date.
The Company has policies to diversify risks and to limit the amount of credit exposure to any
particular counterparty in compliance with the requirements of the Directive. The Company
continuously monitors the fair value calculations, forecast and actual cash flows, and costbudgets so that to ensure that the carrying level of Company’s own funds and consequently the
Capital Adequacy ratio meet the regulatory requirements at all times.
Trade receivables are shown net of any provision made for impairment. The management
believes that no additional credit risk, beyond amounts provided for collection losses, is inherent
in the trade receivables. Cash balances are held with high credit quality financial institutions andthe Company has policies to limit the amount of credit exposure to any financial institution.
5.1.1. Credit risk adjustments
The Company assesses at the balance sheet date whether there is objective evidence that afinancial asset or group of financial assets is impaired. A financial asset or a group of financial
assets is impaired and impairment losses are incurred only if there is objective evidence ofimpairment as a result of one or more events that occurred after the initial recognition of the

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash
flows of the financial asset or group of financial assets that can be reliably estimated.
Trade receivables are recognized initially at fair value and are subsequently measured atamortized cost using the effective interest method, less provision for impairment. For thosetrading receivables that are 90 days or more past due, in non-accrual status, the Company
classifies them as “in default”, thus an impairment test will emerge. A financial asset is past due
if a counterparty has failed to make a payment when contractually due.
Other receivables are recognized initially at fair value and subsequently measured at amortized
cost, using the effective interest method, less provision for impairment. A provision for
impairment of other receivables is established when there is objective evidence that theCompany will not be able to collect all amounts due according to the original terms ofreceivables. Significant financial difficulties of the debtor, probability that the debtor will enter
bankruptcy or delinquency in payments are considered indicators that the trade receivable isimpaired. The amount of the provision is the difference between the asset's carrying amount andthe present value of estimated future cash flows, discounted at the original effective interest rate.
When a receivable is uncollectible, it is written off against the allowance account for otherreceivables. Subsequent recoveries of amounts previously written off are credited in thestatement of comprehensive income. None of the derivative financial instruments is either pastdue or impaired.
5.1.2. Credit Risk – Risk Weighted Assets
The Company’s Credit Risk Weighted Assets and Capital Requirements broken down by
exposure class were as follows:
Table 10 - Exposure classes as at 31 December 2017
Risk Weighted Assets€000
Exposure class
Institutions
1,310
Corporates
16
Retail
1,085
Other Items
203
Total
2,613

Capital Requirements
€000
105
1
87
16
209

The Regulation requires disclosure for additional asset classes. These have not been shown in thetable above as these are nil as at the reporting period.

Risk Weighted Assets by exposure class€000
Other Items, 203

Institutions, 1,310
Retail, 1,085

Corporates, 16
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
5.1.3. Credit Risk – Analysis of Average exposures and total amount of exposures after
accounting offsets
The Company shall disclose the total amount of exposures after accounting offsets and without
taking into account the effects of credit risk mitigation and the average amount of the exposuresover the period broken down by different types of exposures as follows:
Table 11 - Analysis of Average Exposures
Original exposure amount,net of specific provisions€000
Exposure class
Institutions
1,660
Corporates
16
Retail
1,686
Other Items
427
Total
3,789

Average Exposure
€000
1,590
1,716
2,063
753
6,123

5.1.4. Credit Risk – Risk Weighted Assets by Geographical distribution of the exposure
classes
The Company shall disclose the geographical distribution of the exposures, broken down insignificant areas by material exposures classes. The geographical distribution of the exposure
classes of the Company are as follows:
Table 12 - Geographical distribution of the exposure classes
31 December 2017
Geographical Distribution of the Exposures€000
UnitedExposure class
CyprusGermany
Other
Kingdom
Institutions
760
368
385
147
Corporates
03
13
Retail
1,686
Other Items
427
Total
1,187
368
388
1,846

Total
1,660
16
1,686
427
3,789

The Regulation requires disclosure for additional asset classes. These have not been shown in thetable above as these are nil as at the reporting period.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017

Geographical Distribution of the Exposures€000
Cyprus, 1,187
Other, 1,846

Germany, 368
United Kingdom,388

5.1.5. Credit Risk – Distribution of exposures by industry
The Company shall disclose the distribution of the exposures by industry or counterparty type,broken down by exposure classes, including specifying exposure to SMEs, and further detailed if
appropriate as follows:
Table 13 - Exposures by industry
Banking/Financial
services€000
Exposure class
Institutions
1,660
Corporates
16
RetailOther Items
Total
1,676

PrivateIndividuals
€000

Other

Total

€000

€000

1,686

427
427

1,660
16
1,686
427
3,789

1,686

Credit Risk exposure by industry€000
Other, 427
Banking/Financial
services, 1,676

Private Individuals,
1,686

5.1.6 Residual maturity broken down by exposure classes
The Company shall disclose the residual maturity breakdown of all the exposures, broken down
by exposure classes, as follows:

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
Table 14 - Residual maturity broken down by exposure class
Residual Maturity Residual Maturity≤ 3 months> 3 months
Exposure€000€000
Institutions
923
737
Corporates
16
Retail
1,686
Other Items
286
141
Total
2,911
878

Total
€000
1,660
16
1,686
427
3,789

Exposures by Residual Maturity Breakdown€000> 3 months, 878≤ 3 months, 2,911

5.2. Use of ECAIs
The Company shall disclose the names of the nominated External Credit Assessment Institutions(“ECAIs”) and the exposure values along with the association of the external rating with thecredit quality steps.
The Company uses external credit ratings from Moody’s. These ratings are used for all relevant
exposure classes. The general ECAI association with each credit quality step is as follows:
Table 15 - ECAI Association with each credit quality step
CreditMoody’s
Corporate
Institutions
Quality
RatingSovereignCredit Assessment
Step
methodmethodMaturity
Maturity 3> 3 months months or
less
1
Aaa to Aa3
20%
20%
20%
20%
2
A1 to A3
50%
50%
50%
20%
3
Baa1 to Baa3
100%
100%
50%
20%
4
Ba1 to Ba3
100%
100%
100%
50%
5
B1 to B3
150%
100%
100%
50%
6
Caa1 and
150%
150%
150%
150%
below

Sovereign

0%
20%
50%
100%
100%
150%

Exposures to unrated institutions are assigned a risk weight according to the credit quality step towhich exposures to the central government of the jurisdiction in which the institution isincorporated, as specified in Article 121 of CRR. Notwithstanding the general treatment
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
mentioned above, short term exposures to institutions could receive a favourable risk weight of
20% if specific conditions are met.
The Other Items category includes tangible assets, debtors and prepayments risk weighted at
100%, cash items in the process of collection risk weighted at 20% and cash in hand risk
weighted at 0%.
Exposures to corporate clients were risk weighted by 100% risk factor since they were all
unrated and were incorporated in countries with no credit rating or with credit assessment up tocredit quality step 5.
5.2.1. Credit Risk exposures by credit quality step pre and post credit risk mitigation
Table 16 - Exposures before and after credit risk mitigation as at 31 December 2017
Credit Quality Step
Exposure values before
Exposure values after credit
credit risk mitigation
risk mitigation
€000
€000
CQS 6
760
760
Unrated
3,029
2,763
Total
3,789
3,523

Breakdown of Exposures by Credit Quality Step€000
CQS 6, 760

Unrated, 3,029

5.3. Securitisations
The Company is not an active participant in the origination of securitisations (meaning pooled
assets with tranched risk), and accordingly detailed Pillar III disclosures are not made.
5.4. Counterparty Credit Risk
Counterparty Credit Risk (“CCR”) may be defined as the risk that the counterparty to atransaction could default before the final settlement of the transaction's cash flows. Suchtransactions relate to contracts for financial derivative instruments, repurchase agreements andlong settlement transactions. The company takes margin cash deposits as funded credit
protection (collateral) for derivatives and uses the Financial Collateral Comprehensive Method
for calculation of the funded credit protection. The Company in its ordinary course of business
uses over the counter (OTC) derivatives to hedge exposures, i.e. interest rate and foreignexchange risk.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017

Table 17- Counterparty Credit Risk broken down by contract type as at 31 December 2017
Type ofcontract

Interest rate
FX rates &Gold
Equities
Precious
metals except
gold
Commodities
other than
precious
metals
Total

Positive
Fair
Value

Negative
Fair
Value

NominalValue

ExposureAmountbefore
CRM

ExposureAmount
after
CRM

Risk
Weighted
AssetsCapitalRequirements

€000
0

€000
0

€000
36

€000
0

€000
0

€000
0

€000
0

776

(111)

70,067

1,476

1,210

845

68

72

(8)

3,506

282

282

209

17

1

(0)

30

3

3

2

0

52

(0)

239

76

76

56

5

900

(120)

73,879

1,837

1,571

1,113

89

Counterparty Policies with respect to wrong-way risk exposures
Wrong-way risk occurs when the exposure to a particular counterparty is positively correlatedwith the probability of default (“PD”) of the counterparty itself or where there is an adverse
correlation between a counterparty’s PD and the mark-to-market value of the underlying
transaction.
A wrong-way trading situation can be defined as the condition where the exposure to thecounterparty increases, while the counterparty’s financial situation and its ability to pay on thetransaction diminishes.
As part of the credit review process, basic assumptions are established regarding correlations fora given trading product.
The management of wrong-way risk is integrated within the Company’s overall credit risk
assessment approach and is subject to a framework for identification and treatment of wrongway risk, which includes governance, processes, roles and responsibilities, methodology,
scenarios, reporting, review and escalation.
A conservative treatment for the purpose of calculating exposure profiles is applied to material
trades with wrong-way risk features. The wrong-way risk framework applies to OTC, securities
financing transactions and centrally cleared trades. If material correlation is identified, thecollateral is deemed ineligible for regulatory risk calculations and risk is measured on an
uncollateralised basis.
The Company does not have any Wrong-Way Risk Exposures.

5.5. Market Risk
Market risk can be defined as the risk of losses in on and off-balance sheet positions arising fromadverse movements in market prices. From a regulatory perspective, market risk stems from all

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
the positions included in banks' trading book as well as from commodity and foreign exchange
risk positions in the whole balance sheet.
As per the requirements of the Regulation, the Company shall disclose the own funds
requirements for Market Risk exposures.
The Company implements a hedging strategy to minimize its exposure to the market risk. This
strategy consists of identifying and monitoring customers that are associated with higher degrees
of risk for the Company, and hedging positions with clients by opening own account hedging
trades with a cooperating broker. The Company also has a maximum limit of tolerated loss,
which is also used as a trigger for hedging.
The Company benefits from a number of factors that reduce the volatility of its revenue andprotect it from significant changes in market conditions such as its product range. This
diversification leads to a significant reduction in the Company’s exposure to price risk. The
Company’s exposure to risk price at any point in time depends primarily on short-term market
conditions and client activities during the trading day, hence the exposure at each reporting date
may not be representative of the price risk exposure faced by the Company over the year.
The following table discloses the Company’s market risk as 31 December 2017:
Table 18- Market Risk Exposure
Market Risk

2017

Risk Weighted Assets€000

Traded Debt Instruments

13

Equity484

Foreign Exchange

5,223

Commodities

500

Total Market Risk Exposure

6,220

Total Market Risk Requirements

498

5.5.1. Equity Risk
The sum of the absolute values of all the Company’s net long positions and all its net shortpositions is its overall gross position. The Company calculates, separately for each market, thedifference between the sum of the net long and the net short positions. The sum of the absolutevalues of those differences is its overall net position.
The specific risk on this individual equity can be ignored if the stock-index future in question is
exchange traded and represents a relevant appropriately diversified index.
The Company multiplies its overall gross position by 8% in order to calculate its own funds
requirement against specific risk. The own funds requirement against general risk are theCompany's overall net position multiplied by 8%.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
Table 19 - Capital requirements for position risks in equities
Total Exposure€000
General Risk
484
Total
484

Capital requirements
€000
39
39

5.5.2. Foreign Exchange Risk
The Company’s reporting currency is Euro. Foreign exchange risk is the risk that the value offinancial instruments will fluctuate due to changes in foreign exchange rates.
If the sum of the Company’s overall net foreign-exchange position and its net gold position
exceeds 2% of its total own funds, the Company calculates own funds requirements for foreignexchange risk. The own funds requirement for foreign exchange risk is the sum of its overall net
foreign-exchange positions and its net gold position in the reporting currency, multiplied by 8%.
The foreign exchange risk in the Company is effectively managed by setting and controlling
foreign exchange risk limits, such as through the establishment of maximum value of exposure toa particular currency pair.
The table below shows the Company’s exposure to Foreign Exchange Risk (Market Risk):
Table 20 - Foreign Exchange Risk Exposure

Positions in non-reporting currencies and gold

Total Exposure
€000
5,223

Capital requirements
€000
418

5.5.3. Commodities Risk
The risk of the unexpected changes in commodities prices. These commodities are split into
precious metals (except gold), base metals, agricultural products and other energy products (oilgas). The Company calculates its capital requirement with respect to commodities risk using the
Simplified Approach.
Each position in commodities or commodity derivatives is expressed in terms of the standard
unit of measurement. The spot price in each commodity is expressed in the reporting currency.
The capital requirements for each commodity are calculated as the summation of the following:

15% x net position (long or short) x spot price for the commodity
3% x gross position (long plus short) x spot price for the commodity

The overall capital requirements for commodities risk is the sum of capital requirements for eachcommodity.
Table 21 - Capital requirements for Commodities risk
Total Exposure€000
Positions in commodities
500

Capital requirements€000
40

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
5.5.4. Interest Rate Risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes inmarket interest rates. The Company is exposed to interest rate risk in relation to its bank deposits
and from the interest charged on the derivative financial instruments that remain open overnight.
The Company's management monitors the interest rate fluctuations on a continuous basis andacts accordingly.

5.6. Operational Risk
Operational risk is the risk of loss arising from fraud, unauthorized activities, error, omission,
inefficiency, systems failure or external events. It is inherent in every business organization andcovers a wide range of issues.
The Company manages operational risk through a control-based environment in which processes
are documented and transactions are reconciled and monitored. This is supported by continuous
monitoring of operational risk incidents to ensure that past failures are not repeated.
Furthermore, the Company has in place policies and processes whose implementation assists
with the evaluation and management of any exposures to operational risk. Such policy andprocess is the Business Continuity and Disaster Recovery Plan. The Company acknowledges thata significant hazard exists to its ability to continue normal business procedures following
unexpected incident. Moreover, the Company has an important dependency with its automatic
systems and processes. As a result, a recovery plan is needed in order to deal with the risk ofpotential disaster.
For the calculation of operational risk in relation to the capital adequacy reports, the Company
uses the Basic Indicator Approach. Based on the relevant calculations in the Company’s capitalrequirements, the figure calculated shows that the Company’s exposure to operational risk, as at
31 December 2017, was €4,353k as provided by the table below:
Table 22 - Operational Risk capital requirements
2017Year -3

Year -2Last Year

Total

€000
701

€000
2,457

€000
3,807

Total
Exposure
€000
4,353

CapitalRequirements
€000
348

Under the Basic Indicator Approach, the capital requirement for operational risk is equal to 15%of the average of three years of the above relevant indicator, resulting to €348k capitalrequirements.
6. Leverage Ratio
The Company shall disclose the Leverage Ratio and how it applies the definition of Tier 1
Capital. The Company’s Leverage Ratio for the period up to 31 December 2017 was 45.28%
based on the fully phased-in definition of Tier 1:

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
Table 23 - Leverage Ratio
2017

Leverage Ratio Exposure€000

Exposure Values
Derivatives: Current Replacement Cost
Derivatives: Add-on under the mark-to-market Method
Other assets
Total exposures

900
937
1,952
3,789

Capital and regulatory adjustments
Tier 1 capital – fully phased-in definition

1,716

LEVERAGE RATIO

45.28%

7. Other Risks
7.1. Concentration Risk
Concentration Risk includes large individual exposures and significant exposures to companies
whose likelihood of default is driven by common underlying factors such as the economy,geographical location, instrument type etc.
Concentration risk was partly addressed through diversification of counterparties, namely
banking institutions.
The Company’s experience in the collection of trade receivables has never caused debts which
are past due and have to be impaired. The company has a policy in place to monitor debts
overdue by preparing debtors ageing reports.
7.2. Reputation Risk
Reputation risk is the current or prospective risk to earnings and capital arising from an adverse
perception of the image of the Company on the part of customers, counterparties, shareholders,investors or regulators. Reputation risk could be triggered by poor performance, the loss of one
or more of the Company’s key directors, the loss of large customers, poor customer service,fraud or theft, customer claims, legal action and regulatory fines.
The Company has transparent policies and procedures in place when dealing with possible
customer complaints in order to provide the best possible assistance and service under suchcircumstances. The possibility of having to deal with customer claims is very low as theCompany provides high quality services to customers.
7.3. Strategic Risk
Strategic Risk could occur as a result of adverse business decisions, improper implementation ofdecisions or lack of responsiveness to changes in the business environment. The Company’s
exposure to strategic risk is moderate as policies and procedures to minimize this type of risk are
implemented in the overall strategy of the Company.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
7.4. Business Risk
Business Risk includes the current or prospective risk to earnings and capital arising fromchanges in the business environment including the effects of deterioration in economic
conditions. Research on economic and market forecasts are conducted with a view to minimize
the Company’s exposure to business risk. These are analyzed and taken into consideration when
implementing the Company’s strategy.

7.5. Capital Risk Management
Capital Risk is the risk that the Company will not comply with capital adequacy requirements.
The Company's objectives when managing capital are to safeguard the Company's ability tocontinue as a going concern in order to provide returns for shareholders and benefits for otherstakeholders. The Company has a regulatory obligation to monitor and implement policies andprocedures for capital risk management. Specifically, the Company is required to test its capitalagainst regulatory requirements and has to maintain a minimum level of capital. This ultimately
ensures the going concern of the Company. Such procedures are explained in the Procedures
Manual of the Company.
The Company is further required to report on its capital adequacy quarterly and has to maintainat all times a minimum total capital adequacy ratio which is set at 8%. The capital adequacy ratio
expresses the capital base of the Company as a proportion of the total risk weighted assets.
Management monitors such reporting and has policies and procedures in place to help meet the
specific regulatory requirements. This is achieved through the preparation on a monthly basis ofmanagement accounts to monitor the financial and capital position of the Company.

7.6. Regulatory Risk
Regulatory risk is the risk the Company faces by not complying with relevant Laws andDirectives issued by its supervisory body. If materialized, regulatory risk could trigger the effects
of reputation and strategic risk. The Company has documented procedures and policies based on
the requirements of relevant Laws and Directives issued by the Commission; these can be foundin the Procedures Manual. Compliance with these procedures and policies are further assessed
and reviewed by the Company’s Internal Auditors and suggestions for improvement are
implemented by management. The Internal Auditors evaluate and test the effectiveness of theCompany’s control framework at least annually. Therefore the risk of non-compliance is verylow.

7.7. Legal and Compliance Risk
Legal and Compliance Risk could arise as a result of breaches or non-compliance withlegislation, regulations, agreements or ethical standards and have an effect on earnings andcapital. The probability of such risks occurring is relatively low due to the detailed internal
procedures and policies implemented by the Company and regular reviews by the Internal
Auditors.
The structure of the Company is such to promote clear coordination of duties and the
management consists of individuals of suitable professional experience, ethos and integrity, whohave accepted responsibility for setting and achieving the Company’s strategic targets and goals.
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
In addition, the Board meets at least annually to discuss such issues and any suggestions toenhance compliance are implemented by management.

7.8. IT Risk
IT risk could occur as a result of inadequate information technology and processing, or arise
from an inadequate IT strategy and policy or inadequate use of the Company’s information
technology. Specifically, policies have been implemented regarding back-up procedures,software maintenance, hardware maintenance, use of the internet and anti-virus procedures.
Materialization of this risk has been minimized to the lowest possible level.

7.9. Risk Reporting
The Company maintains a system in place to record any risk event incurred on a special form
duly completed by personnel of each department and is submitted to the Compliance officer andRisk manager when such event occur.

7.10. Liquidity Risk
Liquidity risk is defined as the risk when the maturity of assets and liabilities does not match. An
unmatched position potentially enhances profitability, but can also increase the risk of losses.
The Company has policies and procedures with the object of minimizing such losses.
8. Remuneration policy
The Company has established a remuneration policy, which its purpose is to set out the
remuneration practices of the Company taking into consideration the salaries and benefits of thestaff, in accordance with the provisions of the CySEC Directive DI144-2014-14, as amended,for prudential Supervision of Investment Firms, as well as CySEC Circular 031 previously
Guidelines GDIF-07, on remuneration policies and practices, the Circular C138 for
Remuneration policies and practices and Circular C145 on Clarifications for Circular C138,
where these comply with specific principles in a way and to the extent that is appropriate to theCompany’s size, internal organization and the nature, scope and complexity of its activities.
Furthermore, the Company’s remuneration strategy is designed to reward and motivate thepeople who are committed to maintaining a long term career with the Company and performing
their role in the interests of the Company.
The design of the Policy is approved by the people who effectively direct the business of theCompany, after taking advice from the compliance function, and implemented by appropriate
functions to promote effective corporate governance. The people who effectively direct thebusiness are responsible for the implementation of remuneration policies and practices and forpreventing and dealing with any relevant risks, that remuneration policies and practices cancreate. The Board discusses remuneration policy matters at least annually.
Furthermore, the Policy also benefits from the full support of senior management or, whereappropriate, the supervisory function, so that necessary steps can be taken to ensure that relevant
persons effectively comply with the conflicts of interest and conduct of business policies andprocedures.
GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017

Finally, the Policy adopts and maintains measures enabling them to effectively identify where
the relevant person fails to act in the best interest of the client and to take remedial action.

8.1. Remuneration System
The Company's remuneration system and policy is concerned with practices of the Company for
those categories of staff whose professional activities have a material impact on its risk profile,i.e. the Senior Management and members of the Board; the said practices are established toensure that the rewards for the “executive management” are linked to the Company’s
performance, to provide an incentive to achieve the key business aims and deliver an appropriate
link between reward and performance whilst ensuring base salary levels are not set at artificially
low levels. The Company uses remuneration as a significant method of attracting and retaining
key employees whose talent can contribute to the Company’s short and long term success.
The remuneration mechanisms employed are well known management and human resources
tools that take into account the following factors in order to determine the remuneration of eachstaff member:a) educational level,b) experience,c) accountabilityd) responsibilitye) The financial viability of the Company,f) The general financial situation and the state in which the Company operates,g) Each employee’s personal objectives (such as personal development, compliance with theCompany’s systems and controls, compliance with regulatory requirements, commitment
and work ethics) performance evaluation and the rating received based on their annual
performance in relation to the objectives set up at the beginning of the period,h) Each employee’s professional conduct with clients (such as acting in the best interest of
the Client, fair treatment of clients and inducing client satisfaction), as applicable.
The Company’s remuneration system takes into account the highly competitive sector in which
the Company operates, and the considerable amount of resources the Company invests in eachmember of the staff. The remuneration includes all forms of benefits provided by the Company
to its staff and can be Financial or non-Financial remuneration.
It is noted that the Company has taken into account its size, internal organisation and the nature,
the scope and the complexity of its activities and it does not deem necessary the establishment ofa specific remuneration committee. Decisions on these matters are taken on a Board level while
the remuneration policy is periodically reviewed.
The remuneration varies for different positions/roles depending on each position’s actual
functional requirements, and it is set at levels which reflect the educational level, experience,accountability, and responsibility needed for a staff member to perform each position/role. The
remuneration is also set in comparison with standard market practices employed by the othermarket participants/ competitors. Furthermore, the employee’s personal goals and performance
evaluation in relation to the objectives set up at the beginning of the period and the employee’s
professional conduct with clients are taken into account in order to determine the remuneration.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
The total remuneration of staff currently consists of a fixed and a variable component. On the
one hand, the Fixed Remuneration (FR) has purpose to attract and retain Company’s employees.
This fixed amount of remuneration includes salary, fixed pay allowance and other cash
allowances and all are determined based on the role and position of each employee, taking into
account the experience, seniority, education, responsibility, and market conditions. On the other
hand, the variable remuneration is a performance-based remuneration which motivated andrewards staff members based on their results in relation with the targets set in the beginning of
the year. This kind of remuneration is not guaranteed and the Board has determined a maximum
percentage of variable remuneration relative to the fixed remuneration in order to ensure acompliant ratio between these two kinds of remuneration. Although, the maximum limit on
variable remuneration set at 100% of fixed salary, the limit could be set at 200% uponshareholders’ approval according to the Article 21 of Directive DI144-2014-14.
Furthermore there no remuneration is payable under deferral arrangements (with vested orunvested portions). Finally the Company did not pay any non-cash remuneration for the year
under review, since the Company does not have non-cash instrument, such as shares or otherequivalent non-cash instrument, in place.
The Company recognizes that its remuneration system have some features that increases the misselling risk. Therefore, the Company applies effective mitigation controls for each part of the
remuneration system.

8.2. Performance Appraisal
The Company implements a performance appraisal method, which is based on a set of Key
Performance Indicators, developed for each business unit and its target is to promote the healthy
competition amongst personnel, analysis of weak and strong sides of each employee
performance-based and give feedback to the staff member in order to motive them to be
improved. At the most of the times, the performance appraisal takes place in a multiyear
framework in order to ensure that the appraisal process assess employee’s long-term
performance. However, sometimes the performance appraisal is performed on medium andshort-term basis, and the performance indicators of this type of performance appraisal include
quantitative as well as qualitative criteria. The appraisal is being performed as follows:a. Objectives are set in the beginning of each year (depending on the department appraisal
process) defining what the Company functions, departments and individuals are expectedto achieve during the year and half annually.
b. Performance checks and feedbacks: managers provide support and feedback to theconcerned staff annually and semi-annually, during formal or informal performance
reviews; the aim is to assist the staff to develop their skills and competencies.
c. Annual performance review: takes place annually.

8.3. Remuneration of Senior Management Personnel and Directors
The remuneration of the senior management is intended to ensure that the Company will attract
and retain the most qualified Executive Board members. Moreover, the remuneration of theCompany’s non-executive directors is fixed and it is set at a level that is market aligned andreflects the qualification and competencies required based on the Company’s size andGBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2017
complexity, the responsibilities and the time that the non-executive directors are expected toconsume in order to serve the Company.
The remuneration of the senior management personnel of the Company, including Board areshown in the following tables:
Table 24 - Remuneration analysis split by Senior Management and key management
personnel
2017
Executive
Senior Management
Non-Executive
Directors& Key Personnel
Directors€€€
301,228
58,94818,750
Fixed reward
294,491
681
Variable reward
Total
595,719
59,62918,750
Number of3
82
beneficiaries
Companies are required to disclose the number of natural persons that are remunerated €1mln
or more per financial year, in pay brackets of €1mln, including their job responsibilities, thebusiness area involved and the main elements of salary, bonus, long-term award and pension
contribution. Nevertheless, currently there are no natural persons at the Company that are
remunerated €1mln or more per financial year and as such the above disclosure is notapplicable to the Company. No sign-on payments have been awarded during 2017, while noseverance payments were paid during the year. Moreover, the maximum limit on variable
remuneration set at 100% of fixed salary, the limit could be set at 200% upon shareholders’approval according to the Article 21 of Directive DI144-2014-14. The applicable limits arewithin the allowable ranges.
The applicable limits are within the allowable ranges.
Furthermore, aggregate remuneration analyzed by business area is presented below:
Table 25 - Aggregate remuneration analysis by business area
Aggregate Remuneration€
Control Functions
637,081
Brokerage Department
27,180Dealing on Own Department
4,039
Marketing Department
5,798
Total
674,098*Control functions include the Executive and Non-Executive Directors, Compliance Department,
the AML Department and the Risk Manager.

GBE brokers Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

35