15a-6 Chaperoning and Compliance for Foreign Investment Firms

Rule 15a-6 is an SEC exemption that allows foreign broker-dealers and investment banking firms to conduct limited investment banking and securities activities with US institutional investors without registering as a US broker-dealer. Under the rule's primary commercial pathway, the foreign firm conducts covered US-directed activities through a US-registered broker-dealer. This is known as a 'chaperoning' arrangement and it enables the foreign firm to access US capital markets compliantly.

Under a Rule 15a-6 chaperoning arrangement, a foreign investment firm partners with a US FINRA-registered broker-dealer that assumes supervisory responsibility for the foreign firm's US-directed activities. The US broker-dealer executes trades, issues confirmations and account statements, safeguards client funds and securities, and maintains the records required under FINRA and SEC rules. The foreign firm conducts covered activities with US institutional investors without obtaining its own US broker-dealer registration.

Not necessarily. Under Rule 15a-6, foreign broker-dealers and investment banking firms can work with major US institutional investors through a chaperoning arrangement with a US-registered broker-dealer without obtaining their own FINRA registration. This provides a compliant path to US capital markets for foreign firms whose US business does not require a full US regulatory presence.

Full FINRA registration requires forming a US broker-dealer entity, hiring a compliance officer, meeting net capital requirements, and maintaining an ongoing US regulatory presence, which is a significant operational commitment. Rule 15a-6 chaperoning allows a foreign firm to access US institutional investors through a US broker-dealer partner without the foreign firm building its own US regulatory infrastructure.

Rule 15a-6 chaperoning covers activities with US institutional investors, including major US institutional investors such as certain banks, insurance companies, and registered investment advisers. The supervision requirements differ depending on whether the investor qualifies as a major US institutional investor, defined as an entity with $100 million or more in total assets or assets under management. The exemption does not cover retail investor activity.

The timeline for establishing a chaperoning arrangement depends on the foreign firm's structure, the scope of its US activities, and the documentation required for onboarding. Most firms can expect the process to take a few weeks once the required documentation is in order. Finalis' onboarding team manages the process and can provide a specific estimate based on your firm's situation.

Under a chaperoning arrangement, the US broker-dealer assumes supervisory responsibility for covered activities. This includes executing trades, issuing confirmations and account statements, safeguarding client funds and securities, and maintaining the books and records required under FINRA and SEC rules. The foreign firm routes covered US-directed activities through the US broker-dealer and complies with the terms of the arrangement. Finalis' chaperoning framework is designed to support these requirements for each client's specific activity profile.