Financial Services

15a-6 Chaperoning: Access U.S. Capital Markets


Written by Finalis

Last edited on Feb 26, 2024

5 min read

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According to the Securities and Exchanges Commission (SEC), U.S. capital markets are the world’s “deepest and most dynamic,” and the agency oversees “$115 trillion in securities trading in U.S. equity markets annually.” However, the United States imposes significant barriers to entry for foreign financial firms seeking to conduct business onshore. Both the SEC and FINRA prescribe extensive rules and regulations ensuring the protection of the U.S. investor.

Even though the SEC does not prohibit international firms from accessing the U.S. market, companies interested in doing business here understand that setting up a broker-dealer is a complex, bureaucratic, and very expensive process. 

A foreign financial firm's options regarding operating in the U.S. are binary: either establish their own broker-dealer, or operate through a chaperone under SEC Rule 15a-6. The establishment of a broker-dealer typically takes around 9 months and requires a very substantial financial commitment of approximately $1 million.

The 15a-6 Chaperoning solution

Foreign investment banks have been increasingly looking to the United States for opportunities to raise capital for their clients. However, they need to be aware of the requirements in order to be compliant with the SEC. One of the best ways to ensure compliance is to leverage the services of a 15a-6 chaperone.

A 15a-6 chaperone is an individual or firm that is registered with the SEC and FINRA. The 15a-6 chaperone is responsible for overseeing and supervising the activities of the foreign investment bank in the U.S.. These activities can include soliciting U.S. institutional capital on capital raises, developing relationships with U.S. institutional investors, and managing the compliance of the foreign investment bank in the U.S..

On a recent episode of Finalis' Pencils Down podcast, Matthew McConnell, International Business Manager at Finalis, said "This opens up the whole world to the U.S. investor. The SEC allows foreign investors to enter the U.S. market through a chaperone broker. This democratizes the process and enables foreign investors to bring fresh ideas to the U.S. investment markets."

Most foreign financial institutions are not going to invest the kind of capital required to establish a U.S. broker-dealer, and this gives them an extremely cost effective way to operate in the U.S. capital markets,” said McConnell. Using a 15a-6 chaperone provides a number of benefits to foreign investment banks. First, the 15a-6 chaperone assists foreign investment banks in being compliant with all applicable U.S. laws and regulations. This protects the foreign investment banks from fines or other sanctions that could be imposed by the SEC or FINRA.

A 15a-6 chaperone provides access to U.S. institutional investors. This is especially helpful for foreign investment banks as they may not have the same level of access to U.S. institutional investors that U.S.-based investment banks have. Moreover, the 15a-6 chaperone can provide guidance to foreign investment banks on the U.S. capital markets.  

Finally, the 15a-6 chaperone provides access to U.S. institutional capital. Foreign investment banks can tap into a larger pool of potential investors and raise more capital than they would have been able to without the help of the 15a-6 chaperone.

As a foreign (non-U.S.-based) investment bank, you may find yourself in a complex situation when it comes to legally and compliantly raising capital from U.S. institutional investors. In order to navigate the complex regulatory landscape and remain compliant, many investment banks are advised to turn to 15a-6 chaperones to help them navigate the process.

Get in touch and partner with Finalis!

Finalis is currently the leading broker-dealer chaperone service in the U.S. markets. Finalis offers the most comprehensive and secure tech-enabled registration environment for foreign firms to compliantly enter the U.S. markets. Non-U.S. broker dealers can solicit institutional buyers of execution services, deal flow and data products through our leading chaperone service.

Book a call with our growth team to start the process and partner with a chaperone offering the fastest-growing dealmaking platform. 

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