Accessing the U.S. Marketfor Non-U.S. Investment Managers

September 29, 2016

Portland, ME – Philadelphia, PA – Boston, MA – Columbus, OH

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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

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Products – UCITS/SICAVs

• Offerings to the NRA/NRC (non-

resident 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.

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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)

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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

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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

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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.

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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. broker-

dealer

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Your success.

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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

Distribution Options – Third Party Firms

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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

Use of a Third-Party Marketing Firm

Disadvantages

• Cost – generally % of

AUM

• Internal sales staff cannot

get compensated

• Relying on third party firm

to tell your story

Distribution Options – Internal Sales Force

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Advantages

• Your sales force does the

selling

• Sales force can get

compensated

• Broker-dealer responsible

for compliance with U.S.

regulations

Build an Internal Sales Force, registered with

U.S. Broker-Dealer

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

Distribution Options – Proprietary Broker-Dealer

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Advantages

• Your sales force does the

selling

• Sales force can get

compensated

• You control your own

destiny

Establish Proprietary Broker-Dealer

Disadvantages

• Cost – registration and

operating costs

• Required to have certain

principals, annual audit,

compliance program

• Lengthy registration and

approval process (9-12

months)

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Our guidance.

Your success.

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Conclusion

Tremendous opportunities to

access the U.S. market with

registered and unregistered funds.

Compliance with the regulatory

regime is critical to your success.

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.

Foreside

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.

Our integrity.

Our guidance.

Your success.

Foreside Financial Group, LLC

Three Canal Plaza

Portland, ME 04101

Jennifer Hoopes

+1 (207) 553-7138

jhoopes@foreside.com

www.foreside.com

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Contact Information