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As financial markets become increasingly complex and globally interconnected, the importance of becoming an asset management licensee has never been more critical. The team of Eli-Deal has prepared a brief overview of asset management licenses, including the requirements, advantages, procedures for obtaining one, the services included, and the associated costs.
As a banking license, this is a certification granted by financial regulatory authorities that allows a natural and legal person to legally manage investments and offer advice to clients. This authorization is essential for ensuring that companies operate within the law, maintaining the integrity and stability of the financial markets. The licensees are eligible to manage a hedge fund or provide adviser services among other activities. It is imperative for asset managers to comply with the regulatory standards set by authorities to protect investors and preserve the trust in fintech systems.
This field typically encompasses various activities, including but not limited to managing a hedge fund and portfolio. More complex services are as follows:
Obtaining an authorization requires fulfilling specific criteria set by regulatory authorities. For example, in the US, firms need to register with the Securities and Exchange Commission (SEC) or state securities authorities, depending on the size of their assets under management. Applicants must comply with the Investment Advisers Act of 1940 and fulfill the conditions set forth by the relevant authority of the state they are registered in. In Singapore, to get an authorization you would apply for a Capital Markets Services (CMS) license through the Monetary Authority of Singapore (MAS). The application process demands a thorough understanding of the Securities and Futures Act, and adherence to MAS guidelines on financial soundness and operational capabilities. To obtain a license in the UK, you must apply to the Financial Conduct Authority (FCA). The process involves meeting the FCA’s stringent requirements, which include demonstrating the appropriate level of resources, expertise, and a solid business plan. These requirements may vary subject to the jurisdiction but typically include factors such as:
Having a status of a licensee offers several advantages for both individuals and companies:
To obtain a license, one must navigate through a series of steps, which usually involve a combination of registration, compliance, and approval from the relevant financial authorities. The exact process can vary significantly between different jurisdictions due to varying legal obligations and regulative frameworks.
The procedure of licensing typically involves several stages, starting with an initial application and ending with ongoing compliance. Prospective asset managers must submit detailed information about their institution, including their proposed investment strategies, RM systems, and the qualifications of their staff. Applicants must also prepare and submit a set of legal and compliance documents to the relevant regulator, which will then review the package to ensure that it satisfies the necessary standards.
The requirements often include a business plan, proof of sufficient capital, insurance, and evidence of a robust compliance framework. Additionally, key individuals within the company typically need to have recognized qualifications and relevant experience in financial services.
Once the license is obtained, follow these steps to create an AMC:
The cost of obtaining a license varies subject to several factors, including the jurisdiction, regulatory fees, legal assistance, and compliance. It is advisable to consult with legal and financial experts to form the precise cost involved in acquiring the license. The price also depends on whether the license is acquired from scratch or a ready-made institution offered for sale with a license is secured. The price of ready-made license for sale is typically lower.
Our team of lawyers can assist you in navigating the intricate process of getting a license of an asset manager, PSP license, authorized EMI license and many others. We provide expert guidance on law compliance, application preparation, and ongoing legal obligations to ensure that your business operates within the legal mechanisms. While obtaining and maintaining this license can be complex and costly, the benefits it brings in terms of legal operation, market access, and investor confidence are immeasurable. If you consider acquiring a license, please review the offers below and contact us for a consultation.