Accessing the U.S. Market for Non-U.S. Investment Managers

Transcription

1 September 29, 2016 Accessing the U.S. Market for Non-U.S. Investment Managers Portland, ME Philadelphia, PA Boston, MA Columbus, OH

2 Overview Accessing the U.S. Market Products UCITS/SICAVs U.S. Registered Funds (mutual funds or ETFs) Non-Registered Funds Distribution Options Advantages and Disadvantages Regulatory Issues 2

3 Products UCITS/SICAVs Offerings to the NRA/NRC (nonresident alien/non-resident client) market. Generally offered through large U.S. broker-dealers (Pershing, Morgan Stanley, Merrill Lynch). Need connectivity through the NSCC (National Securities Clearing Corporation), a subsidiary of the DTCC. 3

4 Products Registered Funds Mutual Funds Series Trust (established structure and service providers) Stand-Alone Exchange Traded Funds (ETF) Series (reliance on existing SEC Exemptive Relief) Stand-Alone (need to obtain SEC Exemptive Relief) 4

5 Products Registered Funds Register as Investment Adviser Establish Board of Directors Identify Service Providers: Transfer Agent Custodian Administrator Principal Underwriter Fund Counsel Trustee Counsel Audit Firm 5

6 Products Non-Registered Funds Offered pursuant to Regulation D to Accredited Investors Subject to the Investment Company Act of 1940 and relevant exemptions Registration as a Investment Adviser (exemptions and limited registrations possible) Offering documents best practice, not required 6

7 Distribution Options Regulatory Structure Generally, you must be registered as (or with) a U.S. broker-dealer or exempt from registration if you are marketing securities in the U.S. 7

8 Distribution Options Overview Issuer Exemption Chaperoning (SEC Rule 15a-6) Hire a third-party marketing firm Build internal distribution function register sales people with U.S. broker-dealer Establish proprietary U.S. brokerdealer 8

9 Distribution Options Exemptions Issuer Exemption Difficult to meet all requirements of exemption If transaction-based compensation, cannot use this exemption 15a-6 Exemption: Chaperoning Limited marketing to certain types of institutional investors 9

10 Distribution Options Third Party Firms Use of a Third-Party Marketing Firm Advantages Established sales staff and channels Manager does not need to register as a broker-dealer Third party firm responsible for compliance with U.S. regulations Disadvantages Cost generally % of AUM Internal sales staff cannot get compensated Relying on third party firm to tell your story 10

11 Distribution Options Internal Sales Force Build an Internal Sales Force, registered with U.S. Broker-Dealer Advantages Your sales force does the selling Sales force can get compensated Broker-dealer responsible for compliance with U.S. regulations Disadvantages Sales people need to take FINRA exams to be registered Cost generally flat and/or per representative fee Manager cannot get any portion of compensation 11

12 Distribution Options Proprietary Broker-Dealer Establish Proprietary Broker-Dealer Advantages Your sales force does the selling Sales force can get compensated You control your own destiny Disadvantages Cost registration and operating costs Required to have certain principals, annual audit, compliance program Lengthy registration and approval process (9-12 months) 12

13 Conclusion Tremendous opportunities to access the U.S. market with registered and unregistered funds. Compliance with the regulatory regime is critical to your success. 13

14 Foreside Foreside provides U.S. distribution and compliance services to the global investment management industry, including open- and closed-end funds, mutual funds, exchange-traded funds, commodity pools, broker-dealers and investment advisers. Foreside s services allow its clients to focus on asset management without sacrificing compliance and distribution best practices. Foreside s core services include: Distribution legal underwriting, distribution strategy support, registered rep licensing, chaperoning, exchange-traded product operations and DTCC/ NSCC fund sponsorship. Fund Officers chief compliance officer, treasurer and AML officer. Consulting for broker-dealers, investment advisers, non-u.s. asset managers, commodity pool operators. Trust Governance regulatory administration, board governance, trust regulatory filings. Business Management bundled services solution for the management of a US-registered fund.

15 Biography Jennifer Hoopes, General Counsel and Head of Global Ms. Hoopes serves as General Counsel and Head of Global for Foreside Financial Group. She is responsible for oversight of all legal matters as well as Foreside s global initiatives. She has particular expertise in broker-dealer regulatory compliance and the intersection of fund marketing and broker-dealer obligations and has worked with numerous U.S. and non-u.s. investment managers to both registered and unregistered funds as they navigate the U.S. market. Ms. Hoopes is member of several FINRA committees, including the Communications with the Public Committee. She speaks at conferences and on webinars on broker-dealer matters and she is also a member of the Investment Company Institute s Principal Underwriter Advisory Group.

16 Contact Information Foreside Financial Group, LLC Three Canal Plaza Portland, ME Jennifer Hoopes +1 (207)