Ashmore : 2017 PILLAR III

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1. OVERVIEW 3

2. BASIS OF DISCLOSURES

3. FREQUENCY OF DISCLOSURES

4. MEDIA AND LOCATION OF DISCLOSURES

5. CORPORATE GOVERNANCE AND RISK MANAGEMENT 4-9

6. GOVERNANCE FRAMEWORK

7. RISK MANAGEMENT FRAMEWORK

9. RISK CATEGORIES 10-23

10. CREDIT RISK

11. MARKET RISK

12. LIQUIDITY RISK

13. OPERATIONAL RISK

14. CONCENTRATION RISK

15. RESIDUAL RISK

16. SECURITISATION RISK

17. BUSINESS RISK

18. INTEREST RATE RISK (IN THE NON TRADING BOOK)

19. PENSIONS OBLIGATION RISK

20. GROUP RISK

21. REPUTATIONAL RISK

22. INSURANCE RISK

23. CAPITAL RESOURCES 24-25

24. OWN FUNDS

25. CAPITAL REQUIREMENTS

26. CODE STAFF AGGREGATE REMUNERATION 26

28. Overview

    The purpose of this document is to outline the Pillar 3 disclosures for the Ashmore Group (hereafter, the Group). The disclosures on risk management and capital resources are as at the Group's most recent financial year end, 30 June 2017.

    The disclosures include the principal Financial Conduct Authority (FCA) regulated entities, Ashmore Investment Management Limited (AIML) and Ashmore Investment Advisors Limited (AIAL), which are both limited licence BIPRU €50k firms.

    Ashmore is supervised on a consolidated basis in the United Kingdom by the FCA. The method of consolidation used for prudential purposes is the same as that used for the Group's consolidated financial statements. The disclosures included in this document relate to the Group.

29. Basis of Disclosures

    The Group benefits from the FCA Capital Requirements Regulation derogation allowing it to carry forward the CRD III rules as at 31 December 2013 and as such, the following disclosures are in accordance with the requirements of Chapter 11 of the Prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU). The disclosures cover both the qualitative and quantitative requirements.

    The Group, as a limited licence BIPRU €50k firm, is obliged to meet the requirements of the Basel capital adequacy framework, which consists of three pillars:

    • Pillar 1 sets out the prescribed, rule-based minimum capital requirement, being the higher of the sum of i) the market and credit risk and ii) the fixed overhead requirement;

    • Pillar 2 requires firms to make their own assessment of the firm's capital requirements; and

    • Pillar 3 complements Pillars 1 and 2, and requires firms to disclose details of their risks, risk management processes and capital position.

30. Frequency of Disclosures

    The Group has an accounting reference date of 30 June and in accordance with BIPRU 11.3.8, publishes its disclosures as soon as is practically possible after publication of the Annual Report and Accounts, and if appropriate, more frequently.

31. Media and location of Disclosures

These Pillar 3 disclosures are published on the Group's website, http://www.ashmoregroup.com/investor- relations/reports-presentations

1. Corporate governance and risk management

   In accordance with the principles of the UK Corporate Governance Code, the Ashmore Group plc Board (hereafter, the Board) is ultimately responsible for the Group's risk management and internal control systems and for reviewing their effectiveness. Such systems and their review are designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

2. Governance framework

As a consequence of its business activities, Ashmore is exposed to a variety of risks. The Board has ultimate responsibility for the Group's risk strategy and determines the Group's risk appetite and accepted tolerance levels within which the business can operate. Active and effective management of the inherent and emerging risks within the underlying business model is critical to the successful performance of the business. The Board has set out a corporate governance framework that seeks to capture and quantify each of these risks, which subsequently allows it to assess the effectiveness of its internal control and risk management systems. The graphic below explains this framework in more detail.

The Group's system of internal control is integrated with the Group's strategy and business model and embedded within its routine business processes and operations, and a strong control culture is combined with clear management responsibility and accountability for individual controls. The internal control framework provides a process for identifying, evaluating and managing the Group's principal risks. The process is regularly reviewed by the Group's Audit and Risk Committee (ARC). The illustration below shows the Group's Corporate Governance Framework in more detail.