Transactions
Chaperoning
If an FBD enters into a Chaperoning Arrangement with an SEC-registered Broker-Dealer, the FBD would be permitted to have its qualified employees contact from outside the United States (e.g. by telephone) major US institutional investors at any time without an appropriately licensed representative of the Chaperoning Broker-Dealer being present. Qualified employees of the FBD may contact from outside the United States (e.g. by telephone) US Institutional Investors that are not major US Institutional Investors:
- At any time, if an appropriately licensed representative of the Chaperoning Broker-Dealer participates in such contact, or
- Without the participation of a representative of the Chaperoning Broker-Dealer, if such contact takes place outside of the trading hours of the NYSE (currently, 9:30 a.m. to 4:00 p.m. New York time) and no orders to effect transactions other than those involving foreign securities are accepted by the Non-US BD employees during such contact.
- At any time, visit major US Institutional Investors and other US Institutional Investors in the United States if the qualified employee is accompanied on such visits by an appropriately licensed representative of the Chaperoning Broker-Dealer.
- Without being accompanied by a representative of the Chaperoning Broker-Dealer, visit major US Institutional Investors, if the number of days on which such unchaperoned visits occur does not exceed 30 per year and the qualified FBD employee does not accept orders to effect any securities transactions (whether involving US securities or non-US securities) while in the United States.
- FBD may provide US Investors with access to screen-based quotation systems that supply quotations, prices and other trade reporting information input directly by the FBD, so long as any resulting transactions are effected in accordance with the requirements of Rule 15a-6.
Trading
Rule 15a-6(a)(3) permits a FBD to solicit securities transactions by US Institutional Investors or major US institutional investors if, among other things, the FBD effects any resulting transactions through a US registered broker-dealer in the manner prescribed by the Rule. The US Registered Broker Dealer must:
effect all aspects of the transaction. Other than negotiation of the terms. which may occur directly between US investors and the FBD (through its sales personnel), although the US Registered Broker-Dealer may delegate to the Foreign Broker-Dealer the physical execution of foreign securities trades in foreign markets or on foreign exchanges.
- issue confirmations and statements to customers.
- extend margin or arrange for credit where necessary; receive, deliver, and safeguard customer funds and securities.
- comply with applicable US net capital and recordkeeping requirements; and – maintain, in an office of the registered broker-dealer located in the US, books and records relating to the transactions.
Research Distribution
A FBD is permitted under Rule 15a-6(a)(3) to distribute research to US Institutional Investors and major US Institutional Investors if the contacts are “chaperoned” by a US Registered Broker Dealer (which can either be affiliated or unaffiliated). This exemption requires the chaperoning US Broker-Dealer to be responsible for performing certain specific functions in connection with the broker-dealer activities of the foreign firm, including among other things, opening and monitoring accounts, issuing, or ensuring issuance of, required confirmations and account statements, maintaining required net capital related to the transactions, and receiving, delivering and safeguarding funds and securities.
The FBD may distribute research reports to any US Investor (whether or not institutional) through a Registered Broker-Dealer, provided that certain other conditions are met. Specifically:
- US firm must prominently state on the report that it accepts responsibility for the contents of the report.
- the report must prominently indicate that persons receiving the report should effect transactions in securities discussed in the report through the US Firm and;
- transactions in such securities by recipients of the report are to be effected only through the US firm in accordance with Rule 15a-6.
Find out more about the services Avior can provide under this exemption.
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