PILLAR III DISCLOSURES

According to Part Six of Regulation (EU) 2019/2033 of the European Parliament and of theCouncil on the prudential requirements of investment firms

YEAR ENDED 31 DECEMBER 2021

March 2022

Pillar III Disclosures Report 2021

CONTENTS
1. Introduction ........................................................................................................................ 6
1.1

CIF Information ............................................................................................................. 6

1.2

Classification and prudential requirements .................................................................... 7

1.3

Scope of application ....................................................................................................... 8

1.4

Pillar III Regulatory framework..................................................................................... 9

1.5

Risk management objectives and policies ................................................................... 10

1.4.1 Risk Management Framework .................................................................................. 11
1.4.2 Risk Statement .......................................................................................................... 12
1.4.3 Risk Culture .............................................................................................................. 14
1.5. Declaration of the Management Body ............................................................................. 14
2.

Corporate Governance .................................................................................................... 15
2.1.

Board of Directors........................................................................................................ 15

2.1.1.

3.

Number of Directorships held by members of the Board ..................................... 15

2.2.

Policy on Recruitment.................................................................................................. 16

2.3.

Policy on Diversity ...................................................................................................... 16

2.4.

Information flow on risk to the management body ...................................................... 16

Own Funds ........................................................................................................................ 18
3.1. Tier 1 & Tier 2 Regulatory Capital ................................................................................. 18
3.2. Main features of Common Equity Tier 1, Additional Tier 1 and Tier 2 instruments ...... 19
3.3. Balance Sheet Reconciliation .......................................................................................... 19

4.

5.

Own funds Requirements ................................................................................................ 20
4.1.

Initial Capital Requirement .......................................................................................... 20

4.2.

Fixed Overheads requirement ...................................................................................... 20

4.3.

K-Factors Requirement ................................................................................................ 21

5.1.1.

Risk to Client ........................................................................................................ 21

5.1.2.

Risk to Market ...................................................................................................... 24

5.1.3.

Risk to Firm .......................................................................................................... 28

5.1.4.

K-Factors Requirement Results ............................................................................ 32

4.4.

Own Funds Composition & Capital Ratios ................................................................. 33

4.5.

Reporting requirements ................................................................................................ 35

4.6.

Concentration risk requirements .................................................................................. 35

4.7.

Liquidity Requirement ................................................................................................. 37

Other Risks ....................................................................................................................... 38
5.1.

Operational Risk .......................................................................................................... 38

5.2.

Interest Rate Risk ......................................................................................................... 39

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Pillar III Disclosures Report 2021

5.3.

Reputation Risk ............................................................................................................ 39

5.4.

Strategic Risk ............................................................................................................... 40

5.5.

Business Risk ............................................................................................................... 40

5.6.

Regulatory Risk ........................................................................................................... 40

5.7.

Legal and Compliance Risk ......................................................................................... 40

5.8.

IT Risk ......................................................................................................................... 40

5.9.

Conduct Risk ................................................................................................................ 41

6.

Internal Capital Adequacy and Risk Assessment Process ........................................... 42

7.

Remuneration policy ........................................................................................................ 43
7.1.

Remuneration System .................................................................................................. 43

7.2.

Link between the pay and performance ....................................................................... 44

7.3.

Remuneration of Senior Management Personnel and Directors .................................. 45

8.

Investment Policy ............................................................................................................. 47

9.

Environmental, social and governance risks ................................................................. 48

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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LIST OF TABLES
Table 1: CIF License Information (based on the First Appendix of the Law 87(I)/2017) ........... 6
Table 2: Threshold Criteria........................................................................................................... 8
Table 3: Basis of Consolidation of Group entities for regulatory purposes ................................. 9
Table 4: Risk Appetite areas ....................................................................................................... 13
Table 5: Number of Directorships of the members of the Board of Directors*.......................... 16
Table 6: Information flow on risk to management body ............................................................ 17
Table 7: Own Funds Composition as at 31 December 2021 ...................................................... 18
Table 8: Main features of capital instruments ............................................................................ 19
Table 9: Balance Sheet Reconciliation ....................................................................................... 19
Table 10: Deductible variable expenses from Fixed Overheads ................................................ 20
Table 11: Fixed Overheads Requirement ................................................................................... 21
Table 12: Total CMH (average amounts) ................................................................................... 22
Table 13: Total ASA (average amounts) .................................................................................... 23
Table 14:K-NPR capital requirement ......................................................................................... 25
Table 15: Foreign Exchange Risk capital requirements ............................................................. 26
Table 16: Capital requirements for Commodities risk ............................................................... 26
Table 17: Position risks in equities ............................................................................................. 27
Table 18: Position Risks in Traded Debt Instruments for EUR currency .................................. 28
Table 19: K-TCD Exposures ...................................................................................................... 29
Table 20: Total DTF (average amounts) .................................................................................... 32
Table 21: K-Factors Results ....................................................................................................... 32
Table 22: Own Funds ................................................................................................................. 34
Table 23: Large Exposure Limits ............................................................................................... 36
Table 24: Liquidity Requirements .............................................................................................. 37
Table 25: Remuneration analysis ............................................................................................... 46
Table 26: Aggregate remuneration analysis by business area .................................................... 46

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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LIST OF FIGURES
Figure 1: Scope of Application ..................................................................................................... 9
Figure 2: Three Lines of Defence ............................................................................................... 11
Figure 3: K-Factors (Average Amounts) .................................................................................... 24
Figure 4: Top Market Risk Exposures ........................................................................................ 28
Figure 5: K-TCD Per Asset Class............................................................................................... 30
Figure 6: K-Factors Requirement ............................................................................................... 33
Figure 7: Own Funds Requirement as at 31 December 2021 ..................................................... 35
Figure 8: Liquidity Requirement as at 31 December 2021 ........................................................ 37
Figure 9: Operational Risk Registry ........................................................................................... 38
Figure 10: Appraisal Process ...................................................................................................... 45

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1. INTRODUCTION
1.1 CIF Information
GBE Beteiligungs-Holding GmbH (hereinafter, the “Group”) was incorporated in the Germany
with registration number HRB 187059 and it is the parent company of GBE brokers
Beteiligungs-GmbH which was incorporated in Germany with registration number HRB 187941
and indirect parent of GBE Brokers Ltd (the “CIF” or “Company”) which was incorporated in
the Republic of Cyprus on 5 August 2013 with registration number HE 324205 and licensed by
the Cyprus Securities and Exchange Commission (hereinafter the “CySEC”) with number CIF
240/14.
The table below illustrates the current licence information of the CIF:

Financial Instruments

Table 1: CIF License Information (based on the First Appendix of the Law 87(I)/2017)
Investment Services and Activities
Ancillary Services
1
2
3
4
5
6
7
8
1
2
3
4
5
6
7
✓ ✓ ✓
✓ ✓
1
✓ ✓ ✓
✓ ✓
2
✓ ✓ ✓
✓ ✓
3
✓ ✓ ✓
✓ ✓
4
✓ ✓ ✓
✓ ✓
5
✓ ✓ ✓
✓ ✓
✓
6
✓
✓
✓
✓ ✓
7
✓ ✓ ✓
✓ ✓
8
✓ ✓ ✓
✓ ✓
9
✓ ✓
10 ✓ ✓ ✓11
The CIF is authorised to provide the following Investment Services, in accordance with Part Ιof the First Appendix of the Law 87(I)/2017:• Reception and transmission of orders in relation to one or more financial instruments• Execution of orders on behalf of clients• Dealing on own account
The CIF is authorised to provide the following Ancillary Services, in accordance with Part ΙI of
the First Appendix of the Law 87(I)/2017:• Safekeeping and administration of financial instruments for the account of clients,
including custodianship and related services such as cash/collateral management.
• Granting credits or loans to one or more financial instruments, where the firm granting
the credit or loan is involved in the transaction• Foreign exchange services where these are connected to the provision of investment
services.
The CIF 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 First Appendix of the Law 87(I)/2017:

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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1.
2.
3.
4.

Transferable Securities
Money Market Instruments
Units in Collective Investment Undertakings
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.
5. 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 oneof the 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
one of the parties (otherwise than by reason of a default or other termination event), as wellas any other derivative contract relating to assets, rights, obligations, indices and measures
not otherwise 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 regular margin calls.
1.2 Classification and prudential requirements
The Investment Firms Directive (EU) 2019/2034 (“IFD”) and the Investment Firm Regulation,
Regulation (EU) 2019/2033 (“IFR”) entered into force on 26 July 2021, introducing a newclassification system for investment firms, based on their activities, systemic importance, size
and interconnectedness. All investment firms are classified as Class 1, 2 or 3 Investment Firms.
Class 1 Investment Firms are the largest and most interconnected investment firms, with risk
profiles similar to those of significant credit institutions, have equal treatment with credit
institutions in the sense of a level playing field accordingly and they will fall entirely under the
Regulation EU) No 575/2013 (“CRR”).
Investment Firms categorized as Class 2 and Class 3 will have the most impact from the newprudential framework as, the capital requirements, reporting requirements and internal
governance policies are subject to the provisions of IFR/IFD.
CIFs that meet all of the below criteria are categorised as Class 3 Investment Firms while when
they exceed any of the following specific size thresholds, they are categorised as Class 2
Investment Firms.

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7Pillar III Disclosures Report 2021

Table 2: Threshold Criteria
No.
Metric1.
Assets Under Management
2.
Client orders handled – cash trades3.
Client orders handled – derivative trades
4.
Assets safeguarded and administered
5.
Client money held
6.
On- and off-balance sheet total
7.
Total annual gross revenue from investment
services and activities

Thresholds<€1.2 billion< €100 million per day<€1 billion per day
zero
zero
< €100 million< €30 million

Further to the above, the CIF is categorized as a Class 2 Investment Firm since it does not meetall of the above criteria and as such it should maintain own funds of at least the higher between:
A. Permanent minimum capital requirement
The permanent minimum capital requirement of the Group is €750k since it is authorized toprovide the investment service of “dealing on own account”.
B. Fixed overhead requirements
The Fixed Overheads Requirement is calculated as one quarter (¼) of the previous year fixed
expenses (based on audited figures).
C. K-Factors requirement
The new K-Factors are quantitative indicators that reflect the risk that the new prudential regime
intends to address. Specifically, capital requirements from applying the K-factors formula(pursuant to Article 15 of the IFR) is the sum of Risk to Client (‘RtC’), Risk to Market (‘RtM’)
and Risk to Firm (‘RtF’) proxies.
1.3 Scope of application
The Pillar III disclosures Report (the ‘Report’) is prepared in accordance with the disclosure
requirements as laid out in Part Six of the IFR. Investment firms are required to disclose theircapital resources, capital requirements, remuneration policies, practices and governancestandards.
The Report has as a starting point the financial information used in the Financial Statements
which are prepared in accordance with the International Financial Reporting Standards (“IFRS”).
As the two documents serve different purposes, the reported figures illustrate differences, which
lie on the differences of the fundamental concepts between the IFR and the IFRS.
The Group is required to comply with the Pillar 3 requirements on a consolidated basis. As at 31
December 2021, the basis of consolidation of the Group entities for accounting and prudential
purposes is presented in the Group Structure below:

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Figure 1: Scope of Application
The subsidiary companies, their activities and their consolidation method as at 31 December
2021 are presented in the table below.
Table 3: Basis of Consolidation of Group entities for regulatory purposes
Method of
Method of accounting
Description ofName of the entity
regulatory
consolidation
the entity
consolidation
GBE Brokers
Full consolidation
Full consolidation
Financial Holding
Beteiligungs GmbH
GBE brokers Ltd
Full consolidation
Full consolidation
Investment Firm
1.4 Pillar III Regulatory framework
The Report has been prepared in accordance with the new regulatory regime for investment firms
the European Parliament has adopted, the IFR and the IFD as well as the relevant provisions of
the Law 165(I)/2021 “The Prudential Supervisions for Investment Firms Law of 2021” (the“Law”) and the Law 164(I)/2021, amending Law 97(I)/2021, “The Capital Adequacy Investment
Firms Law of 2021”.
The IFR establishes the prudential requirements in terms of own funds, level of minimum capital,
concentration risk, liquidity requirements and level of activity with respect to small and noninterconnected investment firms. Furthermore, IFR introduced significant changes in theprudential regulatory regime applicable to Investment Firms including a new classification
system, an amended minimum initial capital and minimum capital ratios, changes to thecalculation of the capital requirements, the reporting requirements and the internal governancepolicies and the introduction of the K-Factors methodology and new measures relating toliquidity requirements, large exposures and consolidation requirements.

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The Regulatory framework consists of a three “Pillar” approach:• Pillar I - Covers minimum capital and liquidity requirements.
• Pillar II – Regulates the investment firm’s accountability to the regulator for capital andliquidity adequacy. If the regulator deems the capital to be insufficient, a corrective
requirement can be imposed on the Group in the form of what is known as a ‘SREP
decision’.
• Pillar III - Market Discipline requires the disclosure of information regarding the prudential
requirements, risk management and principles of the remuneration policy.
The Group has a formal policy, approved by the Board, which details its approach in complying
fully with the Pillar 3 disclosure requirements as laid out in Part Six of the IFR.
The provisions on disclosure requirements are described in Articles 46 to 53 of the IFR. In
addition, these disclosures must be verified by the external auditors of the CIF. The CIF will be
responsible to submit its external auditors’ verification report to CySEC. The Group has included
its risk management disclosures on its website.
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 Group has considered a disclosure to be immaterial,
this was not included in the document.
Frequency
The Group’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 calculationof capital, business structure or regulatory requirements.
Location of publication
The Pillar III disclosures are published on the Group’s websites:••www.gbebrokers.com
www.gbeprime.com

Verification
The Pillar III disclosures are subject to internal review and validation prior to being submitted to
the Board for approval. The Pillar III disclosures have been reviewed and approved by the Board.
In addition, the Remuneration disclosures have been reviewed by the Risk Manager.
1.5 Risk management objectives and policies
To ensure effective risk management, the Group 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
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within the organisational risk appetite and are fully compliant with the Group’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 Group’s risk appetite and for devising
the suite of policies necessary to control the business including the overarching framework andfor independently monitoring the risk profile, providing additional assurance where required. The
Risk Management Function will leverage their expertise by providing frameworks, tools andtechniques to assist management in meeting their responsibilities, as well as acting as a central
coordinator to identify enterprise-wide risks and make recommendations to address 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 - Comprised 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 thatthe responsibilities of each Function are discharged properly (i.e. soundly, honestly andprofessionally) as well as reviewing the Group’s relevant policies and procedures. Internal Audit
works closely with both the First and Second Lines of Defence to ensure that its findings andrecommendations are taken into consideration and followed, as applicable.

Figure 2: Three Lines of Defence
1.4.1 Risk Management Framework
Managing risk effectively in a Group operating in a continuously changing risk environment
requires a strong risk management culture. As a result, the Group has established an effective
risk oversight structure and the necessary internal organisational controls to ensure that the Group
undertakes the following:

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2021

•
•
•
•

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 concerningcompliance, risk management and internal audit policies, procedures and work as well as theGroup’s risk management policies and procedures as implemented by Management.
As part of its business activities, the Group faces a variety of risks, the most significant of which
are described further below. The Group holds regulatory capital against three all-encompassing
main types of risk: credit risk, market risk and operational risk.
1.4.2 Risk Statement
The Group's activities expose it to a variety of risks, and in particular to credit risk, market risk,
operational risk, compliance risk, regulatory risk, reputational risk, group risk, strategic risk,
liquidity risk, conduct risk etc. The Group, through its operations, has significant exposure to theeconomies and financial markets.
As regards the management of the risks arising from the COVID-19 outbreak, the Group isfollowing the local government guidelines in its response to the virus, testing its business
continuity and disaster recovery plan and supporting the work from home principle whenever it
is possible. During the year 2021, the Group concentrated their efforts on monitoring andassessing the impact of COVID-19 as well as ensuring business continuity. In this respect, it has
taken the required measures to ensure that its employees have access to its technology
infrastructures necessary for the completion of their tasks and that additional systems for critical
functions are being provided.
Risk Strategy
The risk strategy of the Group is the responsibility of the Board, which formulates it and is
responsible for monitoring its implementation. This is achieved through the development of risk
management processes and procedures as well as through an assessment of the risks undertaken
and the effectiveness of the risk management framework, given the Group’s business model. One
important characteristic of the Group’s risk strategy is the alignment with the strategic andoperational targets that are set by the Board.
The risks that arise from the implementation of the Group’s strategic and business plans are
regularly analyzed in order to ensure the adequacy of the relevant policies, procedures andsystems.
The risk strategy of the Group aims to provide to both Senior Management and employees ageneral risk framework for the management of the different types of risk in line with the overallrisk management and risk bearing capacity of the Group. The Group recognizes the importanceof risk management to its business’ success and therefore the overall objective is to establish
effective risk management policies that are able to mitigate the Group’s exposure to the various
risks.
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Risk Appetite
Risk appetite is the level and type of risk a firm is able and willing to assume in its exposuresand business activities, given its business objectives and obligations to stakeholders. Risk
appetite is generally expressed through both quantitative and qualitative means and should
consider extreme conditions, events and outcomes. In addition, risk appetite should reflectpotential impact on earnings, capital and funding/liquidity.
The Group has a low-risk appetite in respect to investing and to managing business andoperational activities.
According to the Financial Stability Board (FSB), an appropriate risk appetite framework (RAF)should enable risk target, risk appetite, risk limits and risk profile to be considered for businesslines and legal entities as relevant, and within the group context.
The Risk appetite framework is defined as the overall approach, including policies, processes,
controls, and systems through which risk appetite is established, communicated, and monitored.
Moreover, it includes a risk appetite statement, risk limits, and an outline of the roles andresponsibilities of those overseeing the implementation and monitoring the RAF. The RAF
should consider material risks to the financial institution, as well as to the institution’s reputation
vis-à-vis policyholders, depositors, investors and customers. The RAF aligns with theinstitution's strategy.
The Group is assessing its risk appetite in respect to investing and to managing business andoperational activities while the Risk Appetite Statement is prepared by the Risk Manager andapproved by the Board of Directors.
Table 4: Risk Appetite areas
Indicator
Minimum Own Fund Requirement
Common Equity Tier 1 Ratio4
AT1 Capital Ratio4
Total Capital Ratio4
Liquid Assets
Return on Assets
Retained Earnings / Total Equity
Notes

Normal 1>€6,800k
>100%
>125%
>150%
>€530k
≥5.00%≥10.00%Warning 2<€6,800k
<75%
<100%
<125%
<€530k
<5.00%<10.00%Limit 3
€5,720k
56%
75%
100%
€448k
0.00%
5.00%

1. The level of the indicator is within the acceptable limits as per the Group’s risk appetite.
2. The Group should take proactive actions in order to ensure that the level of the indicator willremain above the acceptable limits.
3. The level of the indicator falls below the acceptable limits and as such the Group should proceedwith the required actions in order to restore the level of the said indicator to the normal
predefined levels.
4. Additional own funds requirement and 1.50% as per the paragraph 18 of the Law 20(I)/2016
have been taken into consideration for Normal and Warning thresholds

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The Risk Appetite framework has been designed to create links to the strategic long-term plan,
capital planning and the Group’s risk management framework.
The Board approves the Group’s corporate strategy, business plans, budget, long term plan and
ICARA. The Group employs mitigation techniques defined within the policies, to ensure risks
are managed within its Risk Appetite.
1.4.3 Risk Culture
Risk culture is a critical element in the Group’s risk management framework and procedures.
Management considers risk awareness and risk culture within the Group as an important partof the effective risk management process. Ethical behavior is a key component of the strongrisk culture and its importance is also continuously emphasised by the management.
The Group is committed to embedding a strong risk culture throughout the business where
everyone understands the risks they personally manage and are empowered and qualified totake accountability for them. The Group embraces a culture where each of the business areas
are encouraged to take risk–based decisions, while knowing when to escalate or seek advice.
1.5. Declaration of the Management Body
The Management Body is required to proceed with an annual declaration on the adequacy of theGroup’s risk management framework and ensure that the risk management arrangements andsystems of financial and internal control in place are in line with the risk profile.
The Group’s risk management framework is designed to identify, assess, mitigate and monitor
all sources of risk that could have a material impact on the Group’s operations. The Board
considers that it has in place adequate systems and controls with regards to the Group’s size, risk
profile and strategy and an appropriate array of assurance mechanisms, properly resourced andskilled, to avoid or minimise loss.

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2. CORPORATE GOVERNANCE
The systems of risk management and internal control include risk assessment, management or
mitigation of risks, including the use of control processes, information and communication
systems and processes for monitoring and reviewing their continuing effectiveness.
The risk management and internal control systems are embedded in the operations of the Groupand are capable of responding quickly to evolving business risks, whether they arise from factors
within the Group or from changes in the business environment.
2.1. Board of Directors
The management body has the ultimate and overall responsibility for the investment firm anddefines, oversees and is accountable for the implementation of the governance arrangements.
The Board is responsible for ensuring that the Group complies at all times with its obligations
under the Law. In doing so, the Board approves and periodically reviews the effectiveness of thepolicies, arrangements and procedures put in place, whilst if needed, takes appropriate measures
to address any deficiencies.
The Group has in place the Internal Operations Manual which lays down the activities, processes,
duties and responsibilities of the Board, Committees, Senior Management and staff of the Group.
It also implements and maintains adequate risk management policies and procedures which
identify the risks relating to the activities, processes and systems, and where appropriate, sets thelevel of risk tolerated by the Group. The Group adopts effective arrangements, processes andsystems, in light of that level of risk tolerance, where applicable.
The Board has the overall responsibility for the establishment and oversight of the Risk
Management Framework. The Board satisfies itself that financial controls and systems of risk
management are robust.
2.1.1. Number of Directorships held by members of the Board
All members of the Board commit sufficient time to perform their functions in the Group. The
number of directorships which may be held by a member of the Board at the same time shall take
into account individual circumstances and the nature, scale and complexity of the activities.
Unless representing the Republic, members of the Board of a CIF that is significant in terms of
its size, internal organisation and the nature, the scope and the complexity of its activities shallnot hold more than one of the following combinations of directorships at the same time:••

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

Furthermore, directorships in organisations which do not pursue predominantly commercial
objectives such as non-profit or charitable organisations shall not count for the purposes of theabove guidelines.
The table below discloses the number of directorships held by members of the management bodyin entities of the Group as at 31 December 2021:

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Table 5: Number of Directorships of the members of the Board of Directors*
Number of
NonExecutive
Directorships

Director

Entity Name

Function

Number of
Executive
Directorships

Niklas Neubauer

GBE Brokers Ltd

Executive
Director

2-

Rifat Sayim

GBE BeteiligungsGmbH/ GBE
BeteiligungsHolding GmbH

Executive
Director

3-

Kyriakos
Karoullas**

GBE Brokers Ltd

1-

Olga Kvasova

GBE Brokers Ltd-

1

Andreas Psindros

GBE Brokers Ltd-

2

Executive
Director
Non-Executive
Director
Non-Executive
Director* The information in this table is based only on representations made by the directors of the Group.
**Appointed in replacement of Mr. Chistos Domazos

2.2. Policy on Recruitment
Recruitment into the Board combines an assessment of both technical capability andcompetency skills referenced against the Group’s leadership framework. Members of the Board
possess sufficient knowledge, skills and experience to perform their duties. The overallcomposition of the Board reflects an adequately broad range of experiences to be able tounderstand the CIF’s activities, including the main risks to ensure the sound and prudent
management of the Group as well as sufficient knowledge, of the legal framework governing
the operations of a CIF.
2.3. Policy on Diversity
The Group is committed to promote 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 their businessstrategy, and developing talent at every level in the organisation. For this purpose, the Grouptakes into consideration various aspects such as broad industry experience, knowledge,
independence, gender, age, cultural and educational background, for the Board appointments.
2.4. 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 ICARA report as shown in the table below:

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Table 6: Information flow on risk to management body
Report Name
Owner of Report
Recipient
SeniorRisk Manager’s
1
Risk Manager
Management,
ReportBoard, CySEC
Senior
2 Form 165-01
Risk Manager
Management,
Board, CySEC
Senior
3 ICARA Report
Risk Manager
Management,
Board
Senior4 Pillar 3 Disclosures Risk Manager
Management,
Board
Senior
5 Risk Register
Risk Manager
Management,
Board
Senior
6 Compliance Report Compliance Officer Management,
Board, CySEC
SeniorInternal Audit
7
Internal Auditor
Management,
ReportBoard, CySEC
Anti-money
Anti-money
Senior8 laundering
laundering
Management,(AMLCO) ReportCompliance Officer Board, CySEC
SeniorAudited Financial
9External Auditor
Management,
Statements
Board, CySEC
Form 144-14-11
Senior‘Prudential
10
Risk Manager
Management,
Supervision
Board, CySEC
Information’
SeniorForm 20-01
11
Risk Manager
Management,(Recovery Plan)*
Board, CySEC
SeniorResolution
Management,
12
Risk Manager
Templates (XBRL)Board, Resolution
Authority (CBC)

Frequency
Annually

Quarterly

Annually

Annually

Annually

Annually

Annually

Annually

Annually

Annually

Every Two Years

Annually*CIF which are subject to simplified obligations for the purpose of preparing their recovery plansaccording to Directive DI20-01

Furthermore, the Group believes that the risk governance processes and policies are of at mostimportance for its effective and efficient operation. The processes are reviewed and updated on
an annual basis or when deemed necessary.

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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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 Group to absorb losses.
During the year under review, the primary objective of the Group with respect to capitalmanagement was to ensure that it complied with the imposed capital requirements with respect
to its own funds and that the Group maintained healthy capital ratios in order to support its
business.
Further to the above, the Group as a Class 2 investment firm group shall at all times have own
funds at least the highest of the following:•••

Initial minimum requirement,
Fixed Overheads Requirements and
K-Factors Requirement.

The Group throughout the year under review managed its capital structure and made adjustments
to it in light of the changes in the economic and business conditions and the risk characteristics
of its activities.
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 (CET1) and Additional
Tier 1 (AT1) instruments and Tier 2 (T2) instruments issued by the institution. The Group’s
regulatory capital comprises fully of CET1 capital while it has not issued any AT1 or T2 capital.
The composition of the capital base and capital ratios of the Group are shown in the following
table:
Table 7: Own Funds Composition as at 31 December 2021
Own Funds Composition

Solo
€’000

Consolidated€’000

CET1 capital before regulatory adjustments
100
Capital instruments and the related share premium accounts
2,000
7,576
13,463
Audited Reserves
CET1 capital: regulatory adjustments
(80)
(80)
Additional deductions of CET1 Capital (ICF Contribution) *(2)(2)
Intangible Assets
9,494
13,482
CET1 capital
AT1 capital
9,494
13,482Tier 1 capital (T1 = CET1 + AT1)
Tier 2 (T2) capital
9,494
13,482
Total capital*
According to the Circular C334, CIFs should deduct the additional Cash Buffer of 3 perthousand of the eligible funds and financial instruments of their clients as at the previous year
calculated according to paragraph 11(6) of the Directive DI87-07 (operation of the ICF).
GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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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 Common Equity Tier
1, Additional Tier 1 and Tier 2 instruments, the Group discloses the capital instruments’ mainfeatures as outlined below:
Table 8: Main features of capital instruments
Capital Instruments Main Feature
Issuer

CET1
GBE BETEILIGUNGS-HOLDING
GMBH

Regulatory 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
Perpetual or dated
Original maturity dateIssuer call subject to prior supervisory approval
Coupons / Dividends
Fixed or floating dividend/coupon
Coupon rate and any related index

Consolidated
Common Equity
€100k
€100k
Various
Shareholders’ Equity
28 March 2017
PerpetualNo maturity
No
Floating
N/A

3.3. Balance Sheet Reconciliation
Institutions shall disclose a full reconciliation of Common Equity Tier 1 items, Additional Tier
1 items, Tier 2 items and filters and deductions and the balance sheet in the audited financial
statements of the institution as follows:
Table 9: Balance Sheet Reconciliation

Share capital
Audited Reserves
Total Equity as per Audited Financial Statements

Solo
€000
2,000
7,578
9,575

Conso
€000
100
13,463
13,564

Common Equity Tier 1 (CET1) capital: regulatory
adjustments
Other Intangible assets
Additional deductions of CET1 Capital

(2)
(80)

(2)
(80)

Total Own funds

9,494

13,482EquityGBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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4. OWN FUNDS REQUIREMENTS
The Group as a Class 2 investment firm group shall at all times have own funds at least thehighest of the following:• Initial minimum requirement,• Fixed Overhead Requirements and• K-Factors Requirement.
4.1. Initial Capital Requirement
As per the Title III of the Law, the initial capital of a CIF which is authorised to provide any of
the investment services or perform any of the investment activities listed in points (3) and (6) ofPart I of Annex I to the Investment Services and Activities and Regulated Markets Law, shall be€750,000 while for a CIF which is authorised to provide any of the investment activities listed inpoints (1), (2), (4), (5) and (7) and which is not permitted to hold client money or securities
belonging to its clients, the initial capital shall be €75,000. For all other CIFs, the initial capitalshall be €150,000.
Therefore, since the CIF is authorised to provide the investment service of “dealing on own
account”, the Group’s initial capital is €750,000.
4.2. Fixed Overheads requirement
The fixed overheads requirement (FOR) applies to all CIFs. The FOR is intended to calculate aminimum amount of capital that a CIF would need available to absorb losses if it has cause towind-down or exit the market.
It is calculated as the one quarter of the fixed overheads of the preceding year (or business plan
where the audited financial statements are not available) in accordance with the provision of
Article 13 of IFR.
Further to the above and in accordance with RTS issued by EBA, the following variable expenses
can be excluded from the calculation of the fixed overheads:
Table 10: Deductible variable expenses from Fixed Overheads
No. Details
Staff bonuses and other remuneration, to the extent that they depend on the net profit of1.
the investment firm in therespective year
2.
Employees’, directors’ and partners’ shares in profits
Other appropriations of profits and other variable remuneration, to the extent that they3
are fully discretionary
Shared commission and fees payable which are directly related to commission and fees
receivable, which are included within total revenue, and where the payment of the4.
commission and fees payable is contingent on the actual receiptof the commission and fees receivable
5.
Fees to tied agents6.
Non‐recurring expenses from non‐ordinary activities
Fees, brokerage and other charges paid to central counterparties, exchanges and other7.
trading venues and intermediate brokers for the purposes of executing, registering or
clearing transactions, only where they are directly passed on and charged to customers
Interest paid to customers on client money, where there is no obligation of any kind to8.
pay such interest;
GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Pillar III Disclosures Report 2021

9.
10.
11.
12.
13.

Expenditures from taxes where they fall due in relation to the annual profits of theinvestment firm
Losses from trading on own account in financial instruments
Payments related to contract-based profit and loss transfer agreements according towhich the investment firm is obliged to transfer, following the preparation of its annual
financial statements, its annual result to the parent undertaking
Payments into a fund for general banking risk in accordance with Article 26(1)(f) ofRegulation (EU) 2013/575
Expenses related to items that have already been deducted from own funds in accordancewith Article 36(1) of Regulation (EU) 2013/575

Further to the above, the solo and consolidated fixed overheads requirement based on the latest
solo and consolidated audited financial statements are €1,343k and €1,471k respectively as per
the table below:
Table 11: Fixed Overheads Requirement
Item
Total Expenses
Variable Expenses
Annual Fixed Overheads
Fixed Overheads requirement

Solo
€’000
9,882
(4,511)
5,372
1,343

Conso
€’000
10,433(4,550)
5,883
1,471

4.3. K-Factors Requirement
The K-factor capital requirements are essentially a mixture of activity- and exposure-based
requirements. K-factors applies to an individual investment firm will depend on the MiFID
investment services and activities it undertakes.
Capital requirement from applying K-factors formula is the sum of Risk to Client (‘RtC’), Risk
to Market (‘RtM’) and Risk to Firm (‘RtF’).
Further to the above and since the CIF is Class 2 IF which is authorized to provide theinvestment service of Dealing on Own Account, all RtC, RtM and RtF proxies are applicable.
5.1.1. Risk to Client
The risk to Client proxy captures the risk that may be inflicted onto the clients. RtC exists in theactivities/services of the firm which are related to the client and are measured as a percentage ofClients Money Held (CMH), Assets Under Management (AUM), Assets Safeguarded &Administered (ASA) and Clients’ Orders Handled (COH).
The Group is required to calculate the following K-Factors requirements as part of the RtC:
5.1.1.1.K-AUM: Assets Under Management
K‐AUM captures the risk of harm to clients from an incorrect discretionary management of client
portfolios or poor execution and provides reassurance and client benefits in terms of thecontinuity of service of ongoing portfolio management and investment advice.

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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AUM is the value of assets an IF manages for its clients under both discretionary portfolio
management and non-discretionary arrangements constituting investment advice of an ongoingnature.
Calculation
AUM shall be the rolling average of the value of the total monthly assets under management,
measured on the last business day of each of the previous 15 months, excluding the 3 most recent
monthly values.
AUM=average of the 12 months
K-AUM = AUM*0.02%
The Company’s AUM as at 31 December 2021 was zero.
5.1.1.2. K-CMH: Clients Money Held
K‐CMH captures the risk of potential for harm where an investment firm holds the money of its
clients, taking into account whether they are on its own balance sheet or in third‐party accounts
and arrangements under applicable national law provided that client money is safeguarded in theevent of bankruptcy, insolvency, or entry into resolution or administration of the investment firm.
CMH is the amount of client money that an investment firm holds or controls. It excludes clientmoney that is deposited on a (custodian) bank account in the name of the client itself, where theinvestment firm has access to these client funds via a third-party mandate. (on segregated or
nonsegregated basis).
Calculation
CMH shall be the rolling average of the value of total daily client money held, measured at theend of each business day for the previous 9 months, excluding the 3 most recent months.
CMH = average of the 6 months➢ For segregated accounts: K-CMH = CMH*0.4%➢ For non- segregated accounts: K-CMH = CMH*0.5%
The table below shows the Total CMH values in segregated for the 4th quarter of 2021 inaccordance with the Article 18(1) of IFR:
Table 12: Total CMH (average amounts)
Factor amount
DecemberNovember
2021
2021
€’000
€’000

CMH - Segregated (average amounts)

52,51349,400

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

October
2021€’000

46,58722

Pillar III Disclosures Report 2021

5.1.1.3. K-ASA: Assets Safeguarded and Administered
K‐ASA captures the risk of safeguarding and administering client assets, and ensures thatinvestment firms hold capital in proportion to such balances, regardless of whether they are on
its own balance sheet or in third‐party accounts.
ASA means the value of assets that an investment firm safeguards and administers for clients –ensures that investment firms hold capital in proportion to such balances, regardless of whether
they are on its own balance sheet or in third-party accounts.
Calculation
It is calculated as the rolling average of the daily total value of assets under safekeeping andadministration, measured at the end of each business day for the previous 9 months, excluding
the 3 most recent months.
ASA=average of the 6 months
K-ASA = ASA*0.04%
The table below shows the Total ASA values as an arithmetic mean for the 4th quarter of 2021 inaccordance with the Article 19(1) of IFR:
Table 13: Total ASA (average amounts)
Factor amount
December November
October
2021
2021
2021
€’000
€’000
€’000

Total ASA (average amounts)
Of which: assets formally delegated to anotherfinancial entity392,294392,294358,178
358,178

324,120
324,120

5.1.1.4. K-COH: Client Orders Handled
K‐COH captures the potential risk to clients of an investment firm which executes orders (in thename of the client, and not in the name of the investment firm itself), for example as part of
execution‐only services to clients or when an investment firm is part of a chain for client orders.
COH captures the potential risk to clients of an investment firm which executes its orders (in thename of the client). This is the value of orders that an investment firm handles for clients, throughthe reception and transmission of client orders and execution of orders on behalf of clients.
Calculation
COH shall be the rolling average of the value of the total client orders handled, measured
throughout each business day for the previous 6 months excluding the three most recent months.
COH= sum of [ABS(Buys) + Abs (Sells)] for both cash trades and derivatives
GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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➢ For Cash Trades-

The value is the amount paid or received on each trade-

COH=average of the 3 months-

K-COH = COH*0.1%➢ For Derivative Trades-

The value is the notional amount of the contract-

COH=average of the 3 months-

K-COH = COH*0.01%

As at 31 December 2021, the client order handled was zero
The below figure illustrates the average amount of the RtC K-Factors of the Group for the year
2021.
Total K-Factors (average amounts)

600,000

555,752
500,000

472,553449,763

400,000

392,294358,178

340,508
300,000

324,120

278,237

200,000
100,000

48,381

51,94755,35358,156

58,169

K-CMH

K-ASA

46,58749,40052,513-Figure 3: K-Factors (Average Amounts)
5.1.2. Risk to Market
The Risk to market proxy captures the risk an IF can pose to market access. The K-factor for
RtM is based on the rules for market risk, for position in financial instruments in foreignexchange and in commodities in accordance with the CRR.
5.1.2.1. K-NPR: Net Position Risk
A Class 2 investment firm must calculate its K-NPR requirement by reference to trading bookpositions and positions other than trading book positions where the positions give rise toforeign exchange risk or commodity risk. The K-NPR requirement is calculated in accordancewith Title IV of Part Three of the CRR.

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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The Group is exposed to market risk resulting from exposure to:▪
▪
▪
▪

FX Risk;Commodity Risk
Equity Risk
Traded Debt Instrument Risk

As at 31 December 2021, the K-NPR capital requirements for both solo and consolidated isamounted to €3,038k, as shown in the table below:
Table 14:K-NPR capital requirement
K-NPR

Solo
€'000

Conso
€'000

Foreign Exchange Risk

1,573

1,573

Commodities Risk

726

726

Position Risk

710

710

TDI Risk

28

28

K-NPR

3,038

3,038

Foreign Exchange Risk
The Group’s reporting currency is Euro. Foreign currency risk arises when future commercial
transactions and recognized assets and liabilities are denominated in a currency that is not theGroup's functional currency.
The foreign exchange risk in the Group is effectively managed by setting and controlling foreignexchange risk limits, such as through the establishment of a maximum value of exposure to aparticular currency pair as well as through the utilization of sensitivity analysis.
The foreign exchange risk capital requirement is €1,573k emanating from a net foreign exchange
exposure of €22,001k based on the latest relevant calculations of the Group’s capitalrequirements, as at 31st of December 2021.
The Group continues to regularly monitor the impact of exchange rate risks and if deemednecessary corrective actions will be taken to minimize the effect.
Closely Correlated Currencies
Following the EBA’s Final draft Implementing Technical Standards on Closely Correlated
Currencies under Article 354 (3) of CRR, the Group may apply lower own funds requirements
against positions in relevant closely correlated currencies as these are disclosed by EBA. In thisrespect, for the calculation of the foreign exchange risk for matched positions on closely
correlated currencies, a capital requirement of 4% instead of 8% is used.
The Group’s matched positions in closely correlated currencies for the period up to 31 December
2021 were €4,678k. In this respect, please find below the analysis of the Group’s exposure to
Foreign Exchange Risk as at 31 December 2021:
GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Table 15: Foreign Exchange Risk capital requirementsLong

2% total Positions Subject to Capital
Charge
own
funds
Short
Long
Short Matched

CapitalReq.

22,50812,00017,982

Net Positions
TOTAL
POSITIONS
Currencies closely
correlatedof which:
reporting currency
All other currencies
Gold

190

28,257

2,370

4,678

1,573

4,678

13,304

-

4,678

187

2,877

-

2,877

-

-

4,526
-

4,952
2,370

14,953
-

2,370

1,196
190

FX risk analysis is the same for both solo and consolidated basis.
Commodities Risk
Commodities Risk is the risk of the unexpected changes in commodities prices. These
commodities are split into precious metals (except gold), base metals, agricultural products andother energy products (oil, gas).
The Company calculates its capital requirement with respect to commodities risk using the
Simplified Approach. Each position in commodities or commodity derivatives is expressed interms of the standard unit of measurement. The spot price in each commodity is expressed in thereporting currency. The capital requirements for each commodity are calculated as thesummation 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

As at 31 December 2021, the Commodities risk capital requirements due to commodities risk
amounted to €726k.
Table 16: Capital requirements for Commodities risk
Gross Long Gross Short
Net Long
Category
€000
€000
€000
Precious
4,043
284
4,008
Metals
Other
451
291
262
Total

4,493

574

4,270

Net Short
€000

OFR
€000

249

694

102

35

351

729

Commodities risk analysis is the same for both solo and consolidated basis.
Position Risk
Position Risk is the risk involved with a certain trading position, commonly incurred due to thechanges in price of the debt and equity instruments. The Company calculates its capital

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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requirements for position risk as the sum of the own funds requirements for the general andspecific risk of its positions in debt and equity instruments.
Equities
Equity Risk is the risk that the fair value of a financial instrument fluctuates as a result of changes
in market prices other than due to the effect of transactional foreign currency exposures or interest
rate risks.
The sum of the absolute values of all of 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%.
As at 31 December 2021, the market risk capital requirements, due to position risk in equities
amounted to €710k.
Table 17: Position risks in equities

General Risk
Specific Risk
Total

Total Exposure
€000
7,913
964
8,877

Capital Requirements
€000
633
77
710

Equity risk analysis is the same for both solo and consolidated basis.
Traded Debt Instruments
Position Risks in Traded Debt Instruments arising from the investments on Fixed Income
instruments such as bonds. The position risk on a traded debt instrument shall be divided into
two components in order to calculate the capital required against it:a. Specific risk— this is the risk of a price change in the instrument concerned due to factors
related to its issuer; andb. General risk — this is the risk of a price change in the instrument due to a change in thelevel of interest rates.
Net positions shall be classified according to the currency in which they are denominated andshall calculate the capital requirement for general and specific risk in each individual currency
separately. The capital requirement for general market risk for traded debt instruments is
calculated under the maturity-based approach. The instruments’ net positions shall be grouped
into the three zones (maturity bands) according to the residual time to maturity and whether their

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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coupon is above/below 3%. The Company’s trading book exposure is presented in the tablebelow.
As at 31 December 2021, the market risk capital requirements, due to position risk in traded debt
instruments, amounted to €28k.
Table 18: Position Risks in Traded Debt Instruments for EUR currency
Net
Weighting Positions subject
Positionsfactorto capital charge
Currency: EUR
€000
%
€000
TDI in Trading Book
General Risk - Maturity based approach
Zone 3
754
3.75%
28

Own Funds
Requirements
€000
28
354

In light of the above, the three charts below present the top 5 equity exposures, the top 5
commodity exposures and the top 5 foreign currency exposures as at 31 December 2021.
Top 5 Equity Exposureslhag
us500 3%
5%

Other
9%
dj30
48%

ustec
13%

Top 5 Commodity Exposures
Other
XPT/USD btcusd usoil
3% 1% 5%3%
wti_oil4%
XAG/USD
84%

de40
22%

Top 5 FX Exposures
GBP
11%

Other
11%
USD
37%

CAD
11%
JPY
12%

EUR
18%

Figure 4: Top Market Risk Exposures
TDI risk analysis is the same for both solo and consolidated basis.
5.1.3. Risk to Firm
The Risk to Firm captures the risk that could be inflicted on the Company. The K-factors underRtF capture an investment firm’s exposure to their trading counterparties, the concentration risk
GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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in an investment firm's large exposures and the operational risk from an investment firm’s daily
trading flow.
K‐factors for K‐TCD and K‐CON under RtF constitute a simplified application of the rules laid
down in the CRR on counterparty credit risk and large exposure risk, respectively. The Group isrequired to calculate the following K-Factors requirements as part of the RtF:
5.1.3.1. K-TCD: Trading Counterparty Default
K-TCD captures the risk to an investment firm by counterparties to over‐the‐counter (OTC)
derivatives, repurchase transactions, securities and commodities lending or borrowing
transactions, long settlement transactions, margin lending transactions, or any other securities
financing transactions, as well as by recipients of loans granted by the investment firm on an
ancillary basis as part of an investment service that fails to fulfil their obligations, by multiplying
the value of the exposures, based on replacement cost and an add‐on for potential future exposure,accounting for the mitigating effects of effective netting and the exchange of collateral.
Calculation
Calculation based on CRR counterparty credit risk refers to exposure value, credit valuation,
replacement cost, potential future exposure and collateral. The following formulas describe thecalculation of the capital requirement for K-TCD:
K-TCD=a x EV x Rf x CVA
Where:- a=1.2- EV = Exposure value calculated in accordance Article 27 of IFR- RF = the risk factor applicable to the counterparty type as set out in the table 2 in Article
26- CVA = the credit valuation adjustment calculated in accordance with Article 32of IFR.
Table 19: K-TCD Exposures
Type ofcontract
Interest Rate
Foreignexchange
Equity single
nameEquity index
Commodity andemissionallowance
Other
Total

Positive
Fair Value

Notional
AmountPFE Value

Collateral

ExposureAmount

K-TCD

€’000
-

€’000
754

€’000
4

€’000
75

€’000
-

€’000
-

428

231,449

9,258

3,309

6,541

343

22

1,160

371

215

178

14

420

118,701

23,7405,590

18,570

1,671

6

4,767

858

69

795

25

8
884

300
357,132

96
34,327

149
9,407

4
26,08902,053

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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The graph below shows the breakdown of K-TCD capital requirement per assets class:
K-TCD per Asset Class
Precious
Forex
15%Equity metal
1%
1%
Gold
2%
Indices81%

Figure 5: K-TCD Per Asset Class
5.1.3.2. K-CON: Concentration Risk on Large Exposures
K-CON captures concentration risk in relation to individual or highly connected private sector
counterparties with whom firms have exposures above 25 % of their own funds, or specificalternative thresholds in relation to credit institutions or other investment firms, by imposing acapital add‐on in line with CRR for excess exposures above those limits.
All IFs should monitor and control their concentration risk. However only Investment Firms
which are subject to a minimum own funds requirement under the K-Factors should report theconcentration risk.
Limits
Where the client is a credit institution or an investment firm, the limit to concentration will be
the higher of 25% of the investment firm's capital or €150m. If the amount of €150m is higher
than 25% of the firm's own funds, the limit to concentration should not exceed 100% of the firm’s
capital.
Where the client is not credit institution or investment firm, the limit to concentration risk remains
at 25% of the investment firm’s own funds.
Calculation
Where a firm exceeds these limits, it will be required to hold additional own fund requirement
based on the excess over the limit multiplied by a factor between 200% and 900%, depending on
the size of the excess as per Table 6 of Article 39 of IFR.
Further to the above, Own Funds requirement of the excess shall be calculated in accordancewith the following formula:
𝑂𝐹𝑅
𝑂𝐹𝑅𝐸 =∗ 𝐸𝑉𝐸
𝐸𝑉
Where:•OFRE = own funds requirement for the excess;

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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OFR = own funds requirement of exposures to an individual client or groups of connectedclients, calculated by adding together the own funds requirements of the exposures to theindividual clients within the group, which shall be treated as a single exposure;
EV = exposure value calculated in TCD and NPR K-factors;
EVE = exposure value excess calculated as Exposure Value minus Limit

The K-CON own funds requirement shall be the aggregate amount of the own fund requirement
calculated for each client or group of connected clients.
As at 31 December 2021 the Company has the following large exposures:
Name

Type

Client A

RetailExposure Exposure Value
Value
Excess296
2,669

OFR TCD

Excess %

256

3.12%

As at 31 December 2021, the Company was required to hold additional capital requirement (solo
K-CON) due to large exposure with a single counterparty equal to €57k. In this respect, it isadvisable to monitor exposures in order to ensure that the K-CON requirement is withing theacceptable risk appetite limits.
5.1.3.3. K-DTF: Daily Trading Flow
K‐DTF captures the operational risks to an investment firm in large volumes of trades concluded
for its own account or for clients in its own name in one day which could result from inadequate
or failed internal processes, people and systems or from external events, based on the notional
value of daily trades, adjusted for the time to maturity of interest rate derivatives in order to limit
increases in own funds requirements, in particular for short‐term contracts where perceived
operational risks are lower.
DTF means the daily value of transactions that an investment firm enters through dealing on
own account or the execution of orders on behalf of clients in its own name, excluding thevalue of orders that an investment firm handles for clients which are already taken into accountin the scope of client orders handled.
Calculation
DTF shall be the rolling average of the value of the total daily trading flow, measured
throughout each business day for the previous 9 months, excluding 3 recent months.
DTF= sum of [ABS(Buys) + Abs (Sells)] for both cash trades and derivatives➢ For Cash Trades- The value is the amount paid or received on each trade- DTF =average of the 6 months- K- DTF = DTF*0.1%➢ For Derivative Trades- The value is the notional amount of the contract
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- DTF =average of the 6 months- K- DTF = DTF*0.01%
The table below shows the arithmetic mean amount of DTF in derivatives for the 4th quarter of2021, in accordance with the Article 20(1) of IFR:
Table 20: Total DTF (average amounts)
December
2021
€’000

DTF - Derivative (average amounts)

Factor amount
November
October
2021
2021
€’000
€’000

2,621,785

2,117,534

1,915,188

5.1.4. K-Factors Requirement Results
As at 31 December 2021, the K-Factors Requirement is €5,777k on a solo basis and €5,720k on
a consolidated basis as shown in the table below:
Table 21: K-Factors Results
Consolidated

Solo
Item

FactorAmount
€’000

KFR
€’000

FactorAmount
€’000

KFR
€’000

TOTAL K-FACTORREQUIREMENT

5,777

5,720

Risk To clients
K-AUM
K-CMH (Segregated)
K-CMH (non-Segregated)
K-ASA
K-COH (Cash Trades)
K-COH (Derivative Trades)
Risk to Market
K-NPR
Risk to Firm
K-TCD
K-DTF (Cash Trades)
K-DTF (Derivative Trades)
K-CON

367
210
157
3,038
3,038
2,372
2,053
262
57

367
210
157
3,038
3,038
2,316
2,053
262
-

52,513392,294-

2,621,785

52,513392,294-

2,621,785

The below figure illustrates the breakdown of the K-Factors requirement.

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K-Factors Requirement
K-DTF K-CMH
€ 262
€ 210

K-TCD
€ 2,053

K-ASA
€ 157

K-NPR
€ 3,038

Figure 6: K-Factors Requirement
4.4. Own Funds Composition & Capital Ratios
According to the provision 9 of the IFR, Investment firms shall have own funds consisting of thesum of their Common Equity Tier 1 capital, Additional Tier 1 capital and Tier 2 capital, and shallmeet all the following conditions at all times:
𝑪𝒐𝒎𝒎𝒐𝒏 𝑬𝒒𝒖𝒊𝒕𝒚 𝑻𝒊𝒆𝒓 𝟏 𝑪𝒂𝒑𝒊𝒕𝒂𝒍≥ 𝟓𝟔%
𝑫
𝑪𝒐𝒎𝒎𝒐𝒏 𝑬𝒒𝒖𝒊𝒕𝒚 𝑻𝒊𝒆𝒓 𝟏 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 + 𝑨𝒅𝒅𝒊𝒕𝒊𝒐𝒏𝒂𝒍 𝑻𝒊𝒆𝒓 𝟏 𝑪𝒂𝒑𝒊𝒕𝒂𝒍≥ 𝟕𝟓%
𝑫
𝑪𝒐𝒎𝒎𝒐𝒏 𝑬𝒒𝒖𝒊𝒕𝒚 𝑻𝒊𝒆𝒓 𝟏 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 + 𝑨𝒅𝒅𝒊𝒕𝒊𝒐𝒏𝒂𝒍 𝑻𝒊𝒆𝒓 𝟏 𝑪𝒂𝒑𝒊𝒕𝒂𝒍 + 𝑻𝒊𝒆𝒓 𝟐 𝑪𝒂𝒑𝒊𝒕𝒂𝒍≥ 𝟏𝟎𝟎%
𝑫

where D is the own funds requirement calculated in accordance with Article 11.
The own funds, own funds requirement and capital ratio reported as at 31 December 2021, were
the following:

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Table 22: Own Funds

Share Capital
Investors Compensation Fund
Intangible Assets
Audited Reserves
CET 1 Capital
Additional Tier 1
T1 Capital
Tier 2 Capital
Own Funds

Solo
€’000
2,000
(2)
(80)
7,576
9,494
9,494
9,494

Conso
€’000
100
(80)
(2)
13,463
13,482
13,482
13,482OWN FUNDS REQUIREMENTS
Initial Capital
Fixed Overheads Requirement
K-Factors Requirement
Own funds Requirement

€’000
750
1,343
5,777
5,777

€’000
750
1,471
5,720
5,720

€’000
164.34%
6,259
164.34%5,161
164.34%
3,717

€’000
235.68%
10,278235.68%9,191
235.68%7,761

OWN FUNDS COMPOSITIONCAPITAL RATIOSCET 1 (min. 56%)
Surplus(+)/Deficit(-) of CET 1 Capital
T1 (min. 75%)
Surplus(+)/Deficit(-) of Tier 1 Capital
Total (min. 100%)
Surplus(+)/Deficit(-) of Total capitalAs per the above results, the Group as at 31 December 2021 maintains adequate own funds tocover its capital requirements.
However, the Group should monitor the above ratios in order to ensure compliance with thecapital adequacy requirements at all times
Further to the above, the Group has implemented a capital adequacy monthly monitoring
program in order to ensure compliance with the IFR requirements at all times. In this respect, theGroup calculates the capital requirement on a monthly basis in order to assess the capital
adequacy ratio for the respective month.
The figure below illustrates the Own Funds Composition and the three Own Funds Requirements.

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Own Funds Requirement as at 31 December 2021€'000

€ 13,482€ 5,720€ 1,471
Own Funds
Composition

K-Factors
Requirement€ 750

Fixed Overheads Minimum Initial
Requirement
CapitalFigure 7: Own Funds Requirement as at 31 December 2021
4.5. Reporting requirements
The Group as a Class 2 investment firm group is required by the Law to report on a quarterly
basis the following items:a) Level and composition of own fundsb) Own funds requirementsc) Own funds requirement calculationsd) Where the firm is a Class 3 firm – the level of activity, including the balance sheete) and revenue breakdown by investment service and applicable K-factorf) Concentration riskg) Liquidity requirements
The above information shall be reported to CySEC using the Form165-01 “Reporting for Class2” on a quarterly basis.
The Senior Management as well as the Risk Manager monitored such reporting and have policies
and procedures in place to help meet the specific regulatory requirements. This is achieved
through the preparation of accounts to monitor the financial and capital position of the Group.
During the year under review, the Group’s own funds never dropped below its own funds
requirement and the Group fulfilled its obligations by successfully submitting, on a quarterly
basis, the Capital Adequacy Reports.
4.6. Concentration risk requirements
The concentration risk arising from exposures to each counterparty, including central
counterparties, groups of connected counterparties, and counterparties in the same economic
sector, geographic region or from the same activity or commodity, the application of credit risk
mitigation techniques, and including in particular risks associated with large indirect credit
exposures such as a single collateral issuer, must be addressed and controlled including by meansof written policies and procedures.
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Exposure means any asset or off-balance sheet item without applying the risk weights or degrees
of risk. Large Exposure means the exposures in the trading book/banking book of an investment
firm to a client or a group of connected clients, the value of which exceeds the limits set.
The CIFs that are categorized as Class 2 IFs should continue to monitor and control theirconcentration risk with regards to their trading book exposures to a client or a group of connectedclients in accordance with Part four of IFR.
In particular, CIFs shall monitor and control their concentration risk so as not to exceed thefollowing limits as per Article 37 of IFR.
Table 23: Large Exposure Limits
Type
Institution
Non-institution

Limit
Min {up to 100% of eligible capital,
Max (25% of eligible capital, €150m)}
25% of eligible capital

Where any trading book exposure exceeds the limits mentioned above, a CIF shall calculate
additional capital requirement as part of the K-CON requirement.
Moreover, harm can arise from more than just a concentrated trading book exposure to a client.
To mitigate the potential for harm that can arise from different types of concentrated exposuresor relationships, the Group should monitor and control all their sources of concentration risk,
including:• exposures in a trading book• assets (for example, trade debts) not recorded in a trading book• off-balance sheet items• the location of client money• the location of client assets• the location of its own cash deposits• the sources of its earnings
However, there are no limits on the banking book exposures of an Investment Firm.
The Group is reporting to CySEC on a quarterly basis the level of concentration risk with respect
to the credit institutions, investment firms and other entities where clients’ money are held andwhere client securities are deposited while it shall report the level of concentration risk withrespect to the credit institutions where its own cash is deposited as per Article 54(2) of IFR.
Moreover, the Group shall report the top five clients from whom the largest amounts of Group’s
earnings are derived, the top five, if available, largest trading book exposures and largest
exposures not recorded in the trading book.
The Group maintains proper accounting controls in order to identify, monitor and control all
exposures including clients’ balances and the value of the assets held as financial instruments
under pledge.
Finally, the Group will further assess its exposure to concentration risk from its ongoing activities
as part of the ICARA process.

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4.7. Liquidity Requirement
As a Class 2 investment firm, the Company is required to hold an amount of liquid assets
equivalent to at least one third of the fixed overheads requirement. The purpose is to ensure thatthe investment firms have an adequate stock of unencumbered high-quality liquid assets that canbe converted easily and immediately in private markets in cash to meet their liquidity needs fora 30-calendar day liquidity stress scenario. The IFR specifies the instruments that are eligible tobe qualified as liquid assets to be included in the calculation of the said ratio:• Coins and banknotes• Claims on ECB or other Central Banks• High Quality Covered Bonds• Shares or units in CIUs
In this respect and as per the Company’s latest audited financial statements, the Company has
the following liquid assets which is well above the 1/3 of the total fixed overheads requirement.
Table 24: Liquidity Requirements

Liquid Assets
Total

Solo
€’000
5,873
5,873

Conso
€’000
5,873
5,873

Requirement (1/3 of Fixed Overheads Requirement)
Surplus

448
5,310

448
5,310

Item

Further to the above, the Group maintains adequate liquid assets to cover the one third fixed
overheads requirement. However, the Group should monitor the above in order to ensurecompliance at all times. The below figure illustrates the liquid assets from all the EEA Credit
Institutions the Group held their money and the minimum liquidity requirement that the Groupneeds to store in an emergency period.
Liquidity Requirement As At 31 December 2021€'000

€ 5,758€ 448

Liquid Assets

Liquidity
Requirement
Figure 8: Liquidity Requirement as at 31 December 2021
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5. OTHER RISKS
5.1. Operational Risk
Operational risk means the risk of loss resulting from inadequate or failed internal processes,
people and systems or from external events. Operational risk includes legal risk but excludes
strategic and reputational risk.
The following list presents some event-type categories, included in operational risk, with someexamples for each category:Internal Fraud• misappropriation of assets;• tax evasion;• intentional mismarking of positions;• bribery.

External Fraud• theft of information;• hacking damage;• third-party theft;• forgery.

Employment Practices andWorkplace Safety• discrimination;• workers compensation;• employee health;• safety.

Clients, Products, &Business Practice• market manipulation;• antitrust;• improper trade.

Damage to physical assets• damage to physical assets from a natural disaster,e.g. earthquake

Business Disruption &Systems Failures• utility disruptions;• software failures;• hardware failures.

Execution, Delivery, &Process Management• data entry errors;• accounting errors;• failed mandatory reporting;• negligent loss of Client assets.

Figure 9: Operational Risk Registry
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The Group 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 Group has in place policies and processes whose implementation assists withthe evaluation and management of any exposures to operational risk.
The Group has implemented an operational risk management framework designed to ensure that
operational risks are assessed, mitigated and reported in a consistent manner consisting of, interalia, the following components:• Maintaining a four-eye structure and implementing board oversight over the strategic
decisions made by the heads of departments;• A IT Disaster Recovery Plan has been designed in order to be used in the event of a force
majeure affecting the Group’s internal systems and databases; and• Maintenance of Risk Registers in the Context of the ICAAP;• A Business Continuity Plan has been implemented which helps protect all of the Group’s
information databases including data, records and facilities.
• The majority of actions occurring in the Group’s systems are automated and therefore it
is less likely that a human error will occur;• Review of risks and controls as part of the Internal Audit function;• Regular review and updating of the Group’s policies;
Following the outbreak of COVID-19 in Cyprus, the Firm has taken the required measures toensure that its employees have access to its technology infrastructures necessary for thecompletion of their tasks and that additional system for critical functions are being provided. In
this respect, the Business Continuity Plan has been amended accordingly.
5.2. Interest Rate Risk
Interest rate risk is the risk that the value of financial instruments (including currencies) willfluctuate due to changes in the market interest rates. The Group is exposed to interest rate risk inrelation to its bank deposits and from the interest charged on the derivative financial instrumentsthat remain open overnight.
The Group monitors interest rate fluctuations and based on the fluctuations of the relevant rates,
the necessary hedging activities will be undertaken, as and where applicable.
5.3. Reputation Risk
Reputation risk is the current or prospective risk to earnings and capital arising from an adverse
perception of the image of the Group 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 Group’s key directors, the loss of large customers, poor customer service, fraud
or theft, customer claims, legal action and regulatory fines.
The Group has transparent policies and procedures in place when dealing with possible customer
complaints in order to provide the best possible assistance and service under such circumstances.
The possibility of having to deal with customer claims is very low as the Group provides highquality services to customers.
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5.4. 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 Group’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 Group.
5.5. 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 Group’s exposure to business risk. These are analyzed and taken into consideration when
implementing the Group’s strategy.
5.6. Regulatory Risk
Regulatory risk is the risk the Group faces by not complying with relevant Laws and Directives
issued by its supervisory body. If materialized, regulatory risk could trigger the effects ofreputation and strategic risk. The Group has documented procedures and policies based on therequirements of relevant Laws and Directives issued by the Commission; these can be found in
the Procedures Manual. Compliance with these procedures and policies are further assessed andreviewed by the Internal Auditors and suggestions for improvement are implemented bymanagement. The Internal Auditors evaluate and test the effectiveness of the Group’s control
framework at least annually. Therefore, the risk of non-compliance is very low.
5.7. Legal and Compliance Risk
Legal & Compliance risks arise from violations of, or non-conformance with, the Law, Directives
and Circulars issued thereof, regulations, prescribed practices, internal policies, and procedures,or ethical standards. This risk exposes the Group mainly to financial losses due to imposed finesfrom the Regulators. Compliance incidents may also lead to diminished reputation, reducedGroup value, limited business opportunities, reduced expansion potential, and possible inability
to enforce contracts.
The probability of such risks occurring is relatively low due to the detailed internal proceduresand policies implemented by the Group and regular reviews by the Internal Auditors. The
structure of the Group is such to promote clear coordination of duties and the management
consists of individuals of suitable professional experience, ethos and integrity, who haveaccepted responsibility for setting and achieving the Group’s strategic targets and goals. In
addition, the Board meets at least annually to discuss such issues and any suggestions to enhancecompliance are implemented by management.
5.8. IT Risk
IT risk could occur as a result of inadequate information technology and processing or arise froman inadequate IT strategy and policy or an inadequate use of the Group’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.
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5.9. Conduct Risk
Conduct risk is defined as the risk of an action, by an individual, financial institution or theindustry as a whole, which leads to customer detriment or undermines market integrity. This canbring sanctions and negative publicity. Moreover, EBA has defined conduct risk as the current
or prospective risk of losses to an institution arising from inappropriate supply of financial
services including cases of wilful or negligent misconduct. Consequently, conduct risk arises
from failures of designated liquidity providers located in third countries associated with theGroup.
Additionally, the Group is exposed to negative balances with its Liquidity Providers, in case of
fast-pacing volatile market, where the LP cannot close a position at the Group’s stop out limit.
Therefore, the Group may be exposed to conduct risk arising from inadequate agreements with
the Liquidity Providers and/or with the third parties that hold client’s funds.
As part of the risk management policy and tools, the Group has procedures in place to diversify
its liquidity providers and monitors their financial position on an on-going basis. The financial
soundness of the liquidity providers is closely monitored and the Group is ready to switch toalternative LPs, if necessary. Furthermore, the receivable/payable amounts with the LPs aremonitored on a daily basis. In particular, the Group examines its existing procedures andarrangements with respect to the products offered and services provided.

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6. INTERNAL CAPITAL ADEQUACY AND RISK ASSESSMENT PROCESSThe 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 to maintaina minimum risk asset ratio which will ensure there is sufficient capital to support the Company
during stressed conditions.
Pursuant to Chapter 2 and Paragraph 18 of the Law, the Company should establish sound,
effective and comprehensive arrangements, strategies and processes to assess and maintain on an
ongoing basis the amounts, types and distribution of internal capital and liquid assets that they
consider adequate to cover the nature and level of risks which they may pose to others and towhich the investment firms themselves are or might be exposed. These arrangements, strategies
and processes shall be appropriate and proportionate to the nature, scale and complexity of theactivities of the Company and they shall be subject to regular internal review.
ICARA includes a Liquidity Adequacy Assessment and Contingent Funding Plan. Internal
Liquidity Adequacy Assessment Process (ILAAP) and all its components, including risk
elaboration on liquidity risks that are applicable to the firm and a Liquidity stress testing will beincorporated within ICARA.
In light of the above, the new ICARA report will present the main business background aspects
and developments of the Company, a summary of the Company’s business economic
environment, the Company’s financial summary for the previous and upcoming years, thebusiness and strategic goals, organisational structure and the risk management framework, theoverall assessment of the material risks as well as a forward looking capital and liquidity
planning.
Following the implementation of the new prudential regulatory framework, the Company should
replace its existing ICAAP with the new ICARA by establishing new assessments with respect
to the liquidity adequacy of the Company, designing new financial projections and stress tests toreflect the new K-Factors requirement and drafting a new report which reflects all provisions
under the new regulation. The new methodologies of K-Factors and Liquidity Stress tests will beincorporated into the new ICARA process, as well as the updated risk register which will focus
on a harm-pose approach, identifying different potential risk events that may affect theCompany’s overall capital adequacy position.
The risk manager informed the Board that the ICARA report preparation has been alreadyinitiated and the capital planning is designed. It is expected that the new ICARA report will beavailable for review by the board in the third quarter of 2022.

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7. REMUNERATION POLICYThe Group have established remuneration policy that aims to set out the remuneration practices
taking into consideration the salaries and benefits of the staff, in accordance with the provisionsof Directive as well as the Circular 031 on remuneration policies and practices, where thesecomply with specific principles in a way and to the extent that is appropriate to the Group’ssize, internal organization and the nature, scope and Group’s remuneration strategy is designed
to reward and motivate the people who are committed to maintaining a long term career with
the Group and performing their role in the interests of the Group.
The design of the Policy is approved by the people who effectively direct the business, after
taking advice from the compliance function, and implemented by appropriate functions topromote effective corporate governance. The people who effectively direct the business are
responsible for the implementation of remuneration policies and practices and for preventing anddealing with any relevant risks, that remuneration policies and practices can create. 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. Moreover, 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 remedialaction.
7.1.

Remuneration System

The remuneration system and policy is concerned with practices 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 to ensure that the
rewards for the “executive management” are linked to the Group’s performance, to provide an
incentive to achieve the key business aims and deliver an appropriate link between reward andperformance whilst ensuring base salary levels are not set at artificially low levels. The
remuneration is a significant method of attracting and retaining key employees whose talent cancontribute to the short and long term success of the business.
The remuneration mechanisms employed by the Group are well known management and humanresources tools that take into account the employee’s skills, experience and performance, whilst
supporting at the same time the long-term business objectives. One of the key factors consideredis an appropriate link between performance-based variable remuneration whilst ensuring basesalary levels are not set at artificially low levels. Other factors taken into account are thefollowing:(i)the financial viability of the Group;(ii)
the general financial situation of the state in which the Group operates;(iii) the Employee’s personal objectives (such as personal development), compliance withregulatory requirements (including the “best execution policy” and other protective
policies aiming towards the best interest of the client), systems and controls,commitment and work ethics;
The remuneration system takes into account the highly competitive sector in which the Group
operates, and the considerable amount of resources the Group invests in each member of the staff.
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The remuneration includes all forms of benefits provided by the Group to its staff and can be
Financial or non-Financial remuneration.
It is noted that the Group has taken into account its size, internal organisation and the nature, thescope and the complexity of its activities and it does not deem necessary the establishment of a
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.
The total remuneration of staff currently consists of a fixed and a variable component. The fixed
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. Fixed remuneration is also set incomparison with standard market practices employed by the other market participants/
competitors. The Group’s policy is to offer to all Employees a fixed remuneration that is above
the minimum legal requirements (minimum salary as set by the relevant Employment laws anddirectives).
The variable remuneration is a performance-based remuneration which motivates and rewards
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 BoD has determined a maximum percentage
of variable remuneration relative to the fixed remuneration in order to ensure a compliant 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% upon shareholders’approval according to the Article 94 of Directive 2013/36/EU.
Furthermore there no remuneration is payable under deferral arrangements (with vested orunvested portions). Finally the Group did not pay any non-cash remuneration for the year underreview, since the does not have non-cash instrument, such as shares or other equivalent non-cash
instrument, in place.
7.2.

Link between the pay and performance

The Group recognises the responsibility that the Staff has in driving its future success anddelivering value for the business and that remuneration is a key component in motivating andcompensating its employees. Furthermore, the overall remuneration policy incorporates anannual variable incentive compensation reflecting individual performance and overall
performance.
The individual performance is assessed during the annual appraisal process, which establishes
objectives for all staff covering both financial and non-financial factors, specific behavioral

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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competencies including compliance and risk management behaviors with regards to theprocedures.
Further to the above, the Group implements a performance appraisal method, which is based ona 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 and shortterm 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:• The Company
implements a
performance appraisal
program based on key
performance indicatorsand targets.
• Each department setstargets for which theCompany functions,departments andindividuals are expectedto achieve over a
specific timeframe.

Performance Checks &Feedbacks• The Company's managers
provide support andfeedback to the staff during
the daily activities, time
periods decided and/or
during formal or informal
performance reviews.
• The aim is to assist the staff
to develop their skills andcompetencies.

• The Company at theend of each year
evaluates the overall
performance of theyear using quantitativeand qualitative criteria.
• The performance
review determines thelevel of variable
remuneration to beawarded.

Annual Performance
Evaluation

SettingTargets

Figure 10: Appraisal Process
7.3.

Remuneration of Senior Management Personnel and Directors

The remuneration policy of the Group is intended to ensure that it will attract and retain the mostqualified Senior Management Personnel and Directors. As stated above, the criteria used for
determining the remuneration of the directors are segregated into quantitative and qualitative
criteria.
The quantitative remuneration criteria mostly rely on numeric and financial data such as theGroup’s performance and the individual performance evaluation and ratings of each member ofthe staff whose professional activities affect the risk profile of the firm. In addition to thequantitative criteria, the Group has put in place qualitative criteria which include compliancewith regulatory requirements and internal procedures, fair treatment of clients and client
satisfaction.

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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Moreover, the remuneration of the non-executive directors is fixed and it is set at a level that ismarket aligned and reflects the qualification and competencies required based on the Group’s
size and complexity, the responsibilities and the time that the non-executive directors are
expected to consume in order to serve the Group. The remuneration of the senior management
personnel of the Group, including the Board are shown in the following tables:
Table 25: Remuneration analysis split by Senior Management and key management
personnel
Key Management
Non-Executive
Executive Directors
personnel
Directors
Fixed reward
184,821322,270
12,348
Variable reward
4,518
21,036
Total
189,339
343,306
12,348
Number of3
82
beneficiaries
The variable to fixed remuneration ratio as at 31 December 2021 was 5%.
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 Group that are
remunerated €1mln or more per financial year and as such the above disclosure are notapplicable to the Group. No sign-on payments have been awarded during 2021, while noseverance payments were paid during the year. Furthermore, aggregate remuneration analyzed
by business area is presented below:
Table 26: Aggregate remuneration analysis by business area
Aggregate Remuneration
Business Area€
Control Functions
253,254
Brokerage Department
47,430Dealing on Own Account Department
42,084
Administration/ Back Department
147,961
IT Department
41,917
Total
532,646*Control functions include the Executive Directors and MLCO.

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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8. INVESTMENT POLICY
Investment Firms should disclose the following information in accordance with Article 46 ofIFR:a) the proportion of voting rights attached to the shares held directly or indirectly by theinvestment firm, broken down by Member State and sector;b) a complete description of voting behaviour in the general meetings of companies theshares of which are held in accordance with paragraph 2 of Article 46, an explanation of
the votes, and the ratio of proposals put forward by the administrative or management
body of the company which the investment firm has approved; andc) an explanation of the use of proxy advisor firms;d) the voting guidelines regarding the companies the shares of which are held inaccordance with paragraph 2 of Article 46.
CIFs who meet the criteria of Paragraph 26(8)(a) of the Law, whose on-and-off balance sheet
assets on average over the 4 year period are less than €100m are exempted from the disclosure
requirement regarding investment policy.
The Company does not meet the condition of Paragraph 26(8)(a) of the Law and as such it is
not required to disclose the requirements regarding investment policy.

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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9. ENVIRONMENTAL, SOCIAL AND GOVERNANCE RISKS
From 26 December 2022, investment firms which do not meet the criteria referred to Paragraph26(8)(a) of the Law shall disclose information on environmental, social and governance risks,
including physical risks and transition risks as per Article 35 of IFD.
The Company does not meet the condition of Paragraph 26(8)(a) of the Law and as such it isexempted from disclosures regarding ESG.

GBE Beteiligungs-Holding GmbH Ltd parent entity of GBE brokers Ltd authorized and regulatedby the Cyprus Securities and Exchange Commission (CySEC) with CIF license number 240/14.

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