For many UK and international financial services businesses, the U.S. market offers huge potential, but accessing it is far from straightforward. With complex regulations, differing governance and jurisdiction standards, and unfamiliar operational processes to deal with it can put some firms off.
Yet with the U.S. asset management market valued at almost USD 71 trillion and expected to grow to £126 trillion by 2031[i], the opportunity is hard to ignore. Access to large amounts of institutional capital and the opportunity it offers for long-term growth makes expansion across the Atlantic increasingly appealing.
Challenges that hold firms back
One of the most significant obstacles to U.S. market entry is its regulatory structure. Oversight is divided between the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and individual state regulators.
This creates an extremely complex compliance environment, with overlapping reporting obligations, supervisory requirements and governance standards that need to be understood to comply. However, this can be a challenge for non-U.S. firms who often lack in-house expertise to understand these frameworks.
They also must contend with differing governance and reporting standards with processes that are different to what is the norm in the UK or Europe. Plus, there are costs. For example, the New Member Application (NMA) fee structure for FINRA alone ranges from $7,500 to $55,000 depending on the size of the applicant[ii].
It’s therefore essential that companies approach entering the U.S. market with careful planning and a clear strategy in order make the most of the opportunity. For those considering moving into the U.S. markets this year, below is a guide on what firms can expect, and the recommended approaches to take that can help ensure success.
Two ways to enter the U.S. market
There are two different entry routes for UK and European companies to reach U.S. institutional investors, giving businesses the flexibility to choose an approach that fits both their ambitions and their appetite for risk.
The first is chaperoning under SEC Rule 15a-6, which allows non-U.S. firms and Approved Persons to work with U.S. institutional clients through a registered U.S. broker-dealer. This route is quick, often letting companies start operating within days, without the need to set up a fully registered U.S. entity. This option is especially useful for companies who want to test the market or build early relationships to give them a chance to understand U.S. dynamics before committing to a full regulatory registration.
The second option is for firms to seek full regulatory registration, which is best suited to those looking for long-term independence and direct access to the market. To do this, they will need to apply for SEC and FINRA authorisation. This process can typically take between four to six months.
In addition, full registration requires companies to demonstrate robust governance, supervisory arrangements, and compliance systems that align fully with U.S. rules. While this route is more resource-intensive, it does give companies greater operational control and flexibility, which is important for those planning a permanent presence.
These two options can be effected concurrently.
Ongoing obligations include:
It’s important to remember that getting regulatory approval is just the first step. Companies also face several operational difficulties including:
- Financial and regulatory reporting such as monthly financial statements under U.S. accounting standards, net capital calculations and periodic filings.
- Registrations and renewals for the firm and its representatives, including regulatory forms, examinations and fidelity bond coverage.
- Anti‑money‑laundering programmes with annual training, independent testing and robust monitoring.
- Supervision and surveillance of staff and client interactions, including retention of business communications.
- Continuing education through mandatory regulatory testing and firm‑specific training.
- Business continuity and disclosures covering privacy notices, customer identification procedures and annual plan reviews.
- Advertising and communications oversight to ensure marketing materials and electronic communications meet regulatory standards.
These requirements highlight why operational readiness is just as important as regulatory approval. Many firms underestimate the day‑to‑day demands of running a U.S. business, particularly the level of documentation and oversight expected.
Positioning for long‑term success
Despite the hurdles, the U.S. securities market remains a strategically important destination for UK and international firms. Success depends on realistic planning, investment in the right operational foundations and having a clear understanding of regulatory expectations. Firms that embed compliance into everyday activity, anticipate the practical demands of operating in the U.S. and allow adequate time for the approval process are far better placed to take advantage of the opportunities available. Working with advisers who understand both UK and U.S. regulatory regimes can make the transition far smoother, helping firms avoid missteps and reduce the risk of non‑compliance.
In collaboration with Rosemarie Connell, Senior Managing Director of Integrated Solutions and Howard Spindel, the senior founding member of the family of firms comprising Integrated Solutions
[1] https://www.finra.org/registration-exams-ce/classic-crd/fee-schedule
