Introductory NoteIn compliance with the Notice 10/2007 of Bank of Portugal, this document aims to provide information on the activity of Dif Broker – Sociedade Financeira de Corretagem, S.A., within a prudential framework and accordingly to the Basel III agreement’s recommendations.
1. Declaration of Responsibility
The Board of Directors of Dif Broker – Sociedade Financeira de Corretagem S.A. hereby states that, pursuant to the terms and for all purposes of Notice 10/2007 of the Bank of Portugal, the company proceeds accordingly to the following requirements:
Certifies that all proceedings deemed necessary were development and that, to its knowledge, all the
information disclosed is authentic and reliable;
Ensures the quality of all the information disclosed;
Undertakes to, in due time, disclose any significant alterations that might occur during the exercise mentioned on this document;
During 2015, two simultaneous capital increases were carried out, which amounted to 1.810.000€, of which 300.000€ by incorporation of reserves and 1.510.000€ by new money entries, in the aftermath of Dif Broker’s transformation to a Financial Brokerage Company.
2. Scope of Application and Risk Management Policies
Dif Broker, Sociedade Financeira de Corretagem, S.A., offers to its customers (companies, individuals and institutions) a set of financial services and instruments which allow the action on several financial markets.
Dif Broker holds 100% of the branch in Spain, Dif Broker Sucursal en España S.L. The financial statements of the Branch are integrated accordingly to the international accounting standards and prudential rules of the Bank of Portugal.
The Company has its registered office on national territory and therefore it is subject to the compliance with the current standards in Portugal concerning capital transfers and, to its knowledge, there are no significant impediments for a quick transfer of own capital.
Dif Broker does not fulfill the conditions provided on article 3 of the Decree-Law 145/2006 of 31 July to be considered a financial conglomerate.
3. Objectives and Risk Management Policies
Dif Broker is not exposed to the market risk which arises mainly from the uncertainty derived from investments on the financial market with consequences at the level of interest rates, asset prices and exchange rates alterations.
Dif Broker does not directly act on financial markets, does not grant credits and does not hold an own portfolio of financial instruments, therefore not being exposed to the credit and market risk.
Regarding the operational risk, Dif Broker has an independent compliance department, ensuring the application of the best practices, in order to offer more transparency and efficiency to the Internal Control procedure.
The Board of Directors approved the company’s risk management policy and all the employees were informed.
4. Capital Adequacy
4.1. Qualitative Information
The company’s own capital is determined based on the provisions of Notice 12/92 of Bank of Portugal. On 31 December 2015, Dif Broker’s own capital comprised the eligible capital, the reserves and the eligible results.
Bank of Portugal monitors and supervises Dif Broker’s activity, on prudential matters, safeguarding the financial system’s stability and solidity.4.2. Quantitative Information / Models
The monetary values submitted, if not expressed otherwise, are in euros and reflect the Company’s positions on 31 December 2015.
For Capital Adequacy purposes, namely regarding the sufficiency of Dif Broker’s capital, the minimum own capital required by law must correspond to at least 50% of the share capital or to ¼ of the general fixed expenses of the previous year. In the case of Dif Broker, the capital position is surplus as the own capital represented, on 31 December 2015, about 130% of the share capital.
The minimum required capital for a Financial Brokerage Company is 3.500.00€. On 31 December 2015, the Dif Broker’s ascending own capital is 4.929.932€, which corresponds to a surplus, regarding the minimum required for this type of company, of 1.425.526€.
Os valores monetários apresentados, se nada estiver indicado em contrário, encontram-se em euro e refletem as posições do Sociedade em 31 de Dezembro de 2015.
5. Counterpart Credit Risk
6. Credit Risk
7. Credit Risk Reduction Techniques
8. Securitisation Transactions
9. Position, Counterpart Credit and Business Portfolio Settlement Risks
10. Exchange and Goods of Bank or Business Portfolios Risks
11. Positions at Risk on Bank Portfolio Shares
12. Operational Risk
Dif Broker calculates the own capital requirements for the Operational Risk, accordingly to the Basic Indicator Method. Accounting elements deemed relevant for the indicator’s calculation:
Interests and similar income revenues
Interests and similar income charges
Other operating income
13. Sensitivity Analysis of the Capital Requirements
o Interest Rate Risk on a Bank Portfolio – Dif Broker, as it does not hold a business portfolio, is not exposed to the interest rate risk on a bank portfolio.