Many Ifina clients ask whether they need to be regulated to manage the assets of the fund.
The simple answer is yes.
In all jurisdictions, there is a financial services regulator responsible for supervising and regulating the various financial service providers – including investment managers.
Investment management is a regulated activity and as such, whoever is providing this service will need to have the necessary permissions and regulatory approvals to do so.
In the UK, the financial services regulator is the Financial Conduct Authority (FCA) and investment management companies and connected individuals are required to have the relevant permissions to manage investments.
We get many traders/managers coming to Ifina to establish an investment fund. However, they are often unregulated and as such are unable to manage the fund’s assets.
To the fledgeling and aspiring investment manager, obtaining regulatory approval for managing the assets of a fund can seem an extremely daunting task.
To establish an FCA regulated company in the UK can be expensive – and the application process can take many, many months, sometimes up to twelve months.
Is there an alternative option open to our fledgeling fund manager?
Yes, there is. It’s is very cost effective and can be achieved in a matter of 5/6 weeks.
Our client traders require two basic regulatory permissions:
The first is the ability to market the fund to potential investors;
The second is the ability to manage the Fund’s assets.
The solution is ‘regulatory hosting’.
There are many FCA firms in the UK that provide regulatory umbrella services to facilitate activities of those who wish to advise/arrange transactions and aspiring fund managers who wish to manage/trade client money by way of a fund or managed account.
The process is very straightforward.
The first step is that the trader forms his own UK management company of which he is an appointed director. This company cannot manage the fund’s assets as it is not regulated.
Therefore, the regulatory hosting firm assumes the role of Investment Manager to the fund and applies to the FCA to appoint the trader’s UK company and the trader as a named individual as an Authorised Representative of the hosting firm.
This provides the trader with a CF1 permission, which enables the trader to market to his fund and services to potential investors.
In order for our trader to manage the fund’s assets, he is seconded to the hosting firm who obtain a CF30 permission for our client trader. This enables our trader to manage the fund’s assets under the regulatory umbrella of the hosting firm.
Ifina works with several well established regulatory hosting firms and assists the new fund manager in obtaining the necessary regulatory permissions for them to manage the fund’s assets.
Regulatory hosting is a tried and tested solution for the start-up fund manager seeking a cost and time efficient means of obtaining necessary regulatory fund management permissions.
Many of our clients use this hosting service as a precursor to eventually establish their own fully fledged regulated management company.
While assets under management are at a minimum the regulatory hosting route provides the perfect solution.
Do you need help setting up your investment fund? Email firstname.lastname@example.org and we can arrange a call. If you have any questions, please leave them in the comments below.