What Is A Regulatory Umbrella?

In this PODCAST – What Is A Regulatory Umbrella? – we learn the steps necessary for regulating your trading activities in the UK. The least expensive way is to have a company such as Starmark Investments handle all the compliance matters for you. Job done!

In a nutshell Starmark Investment Management talks about how a potential trader (or fund) who wishes to operate/or operates in the UK trading third party funds on a discretionary basis may fall under the requirements of the FCA.  Those requirements can be regulated.  Eldon talks about several options open to a potentially regulated person in the UK and how to minimise costs rather than the burdensome administrative and cost requirements to do this yourself.

A self-regulation approach can take up to 12 months but a regulatory umbrella, an alternative solution to self-regulation can take as little as 6 – 8 weeks.

There are two aspects that need to be addressed within the umbrella:

  1. The (AR) Appointed Representative:
    They can “Advise” “Arrange” and “Market Introduce” but not “Manage Investments” The regulated entity, known as The Principle, in this case Starmark can elect Appointed Representatives under it.  This means that you as the AR have no direct contact with the FCA as the Principle completes the necessary ongoing documentation for you.  The AR is an “agent” of the Principle and must abide by the rules.
  2. The Investment Management Services:
    Here Starmark acts as the Investment Manager so you can manage investments. An agreement is setup whereby the AR is identified as a “Trading Advisor”. Now the Trading Advisor can elect individuals, i.e its traders and marketers to become regulated “CF30’s” under the umbrella.

Costs for the service can be either:

  1. A % of Management Fee or Performance Fee
  2. A fixed cost or flat fee

Costs are discussed along with the various options open to a potentially regulated individual or company.

Lastly, in What Is A Regulatory Umbrella, Eldon discusses the final piece of the jigsaw known as Transaction Reporting.  So, if you trade Exchange Traded Products you need to report into two regimes:

  1. EMIR which reports all the derivatives through an “ARM” – Approved Reporting Mechanism
  2. MIFID II which reports all the European listings.

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