EP 4: Why Fund Structure Decides Your Distribution Before You've Even Launched

It's easier to market an EU fund in the UK than a domestic one. If that sounds backwards, you haven't yet gone through the regulatory puzzle that sits underneath every new fund launch.

In this episode, Wayne is joined by Giles Swan: public policy and regulatory consultant, former UK financial regulator with 25 years of international experience across investment services, digital assets, and payments, to unpack the part of fund launches that gets far less attention than the investment pitch: the regulatory structure. 

Before a manager gets anywhere near investors, they have to answer two deceptively simple questions: what is the fund going to do, and who is it for. Those answers determine everything from USITS versus non-USITS eligibility to whether real estate or private credit can even be held in the vehicle.

They explore why the temptation to give a fund the broadest possible investment remit backfires the moment a regulator asks for genuine specificity. They cover how the Overseas Funds Regime has changed the economics of distributing an EU USITS into the UK post-Brexit, turning what was once free under temporary permissions into a cost that includes a UK financial promotion approver. They get into why "no regulator is just checking boxes," and what the FCA actually digs into on model portfolios, stress testing, and target market. They also unpack how value and cost are assessed differently in the UK versus the EU's undue costs regime, and why a higher fee demands active justification rather than a better track record alone. And they look at what regulators check beyond the product itself: the firm, the people, and the delegation arrangements behind it.

Whether you're structuring a fund for the first time or reassessing how an existing one is distributed, getting this right is the foundation everything else in the Roadmap to £10bn is built on.

If you want to understand where your model sits and what it needs to work harder on, the Roadmap to £10bn package is the place to start: https://www.zeyro.one/roadmap-to-10bn-package

Transcript

SPEAKER_00 0:00

It's easier to market an EU investment fund in the UK than a domestic one. Wayne. When people have an investment proposition that they want to bring to the world, they often think about setting up an investment fund. And we find that there's a lot of focus on the product itself, but actually less focus on the regulatory puzzle that needs to be solved. And let's talk about some of those elements and how the regulatory piece features in setting up and launching a new investment fund.

SPEAKER_01 0:36

Yeah, so right from the off, first thing you've got to work out is what is it your fund's going to do? And the second bit is who you are you're going to sell that fund to. And those are the very basic fundamental parts of page one of your regulatory application, aren't they? So what's the regulatory structure, what's the investment objective, what's the policy, and so on. And um, these I think are often seen as quite a straightforward, reasonably simple bit to get started with, but actually are far more complicated, aren't they? As I imagine that you've uh you've come across when you've designed some funds uh in the past.

SPEAKER_00 1:11

Yeah, absolutely. And and it's this idea that, well, hey, we've got a great track record, we've got great performance, we've got an investment proposition that you know is going to be attractive in the market, isn't it? Um so let's just fit that into a structure and and submit application. Uh, and often people that kind of don't get beyond thinking about page one and thinking about all of the different pieces that need to go into regulatory application. And more importantly, the scrutiny that a regulator like the FCA is going to impose when they're looking through the fund and the way in which that's structured, all of the service providers. So it's a really important decision and it's really critical because if you make the wrong call, you'll either get an application rejected or you're gonna um extend the period of time that it's gonna take to launch the product and then maybe miss the market opportunity.

SPEAKER_01 2:00

Yeah, one of the big sort of problems that I think portfolio managers have with this, that's probably getting a bit better. But if you're in particular an EU-based fund manager coming into the UK, you're gonna find this is that the temptation is to give yourself the broadest possible investment objective and uh strategy, remit, I guess, so that you're not too constrained. But then as soon as you put that in under the nose of someone like the FCA and increasing the EU to be fair, then you're gonna hit a bit of a problem there, aren't you?

SPEAKER_00 2:30

Yeah, and I think regulators are looking for the investment objectives to be clearly described, but really they're looking to enable a retail investor to understand what the what the product is doing, but also to be able to compare that product against others as well. So if you're looking for uh for an investment in a particular sector or particular theme, it's being clear on how does this fund work, what does this fund invest in, what's its investment thesis, compared to let's say the other 10 funds that are in that particular sector, and then allowing an investor or their advisor to determine which is the most appropriate product.

SPEAKER_01 3:04

What that starts to do then is bring you into something that's probably a little more complex, but certainly a lot less familiar to portfolio managers, which is what's the right structure from a regulatory perspective for a fund? So suddenly now you're faced with USICS AF in the UK, you've got non-USICS and so on. What are the what are the kind of options there that people have and what what impact does that have on the fund from an investment objective point of view, but then I guess throughout the entire rest of the uh the funds, the fund setup?

SPEAKER_00 3:39

And there are probably two buckets that I would put the the answers of that question into. Firstly, who is the target market for the for the fund? Uh and fairly clearly that's going to either be retail or it's not going to be retail. But digging into that, what do we mean by retail? Do we mean mass market retail? Do we mean more sophisticated retail investors, or are we just targeting kind of professionals, high net worth individuals, etc.? So that investor type, if you like, that target market is one of the two buckets that you that you need to think about in making the decision as to which structure you're looking for. The other bucket is really the investment proposition. And here we're into you know the the assets that we're thinking about investing in. Are we investing in mainstream main market assets like equities or bonds? Are we interested in real estate or infrastructure or other private credit, for example, or private equity? And that's the other consideration that we need to think about in determining which fund structure. And I'm sure we're gonna unpick some of those acronyms you just mentioned uh a moment ago. So it's the the investor piece, but also the investment piece that you need to think about.

SPEAKER_01 4:49

Yeah. Yeah. So I guess most people are going to be familiar with USITS. So let's let's start with that. So the pros and cons of USITS, what does it allow you to do, but also having that wider access and that familiarity brings with it, I guess, more restrictions than you've got with other fund structures.

SPEAKER_00 5:05

Absolutely. So USITS, undertakings for collecting investment in transferable securities to give it its full name. This is the EU created investment fund framework, really for retail-focused investment funds, because USICS can be distributed to professional funds. Post-Brexit, we have the UK USICS regime, and then we have the EU regime as well. One of the main benefits, I guess, of that structure is it's it's well understood and well known by retail investors and also advisors. We have the added benefit of being able to in the EU passport, so being able to market that fund more broadly. Um, but there are some constraints with that structure. And the main constraints with UCITs are on the investment side. Um, so really just the focus on uh, if you like, transferable securities as we call them. But what we mean by that is kind of main market securities like stocks and shares or bonds, um, but not including assets like real estate. So we couldn't set up a real estate fund uh in a UCIT structure, for example. So it's really optimal from a distribution and an understanding perspective, but also um considerations on the investment side in you know what can we do? Um, and it's not just what we can invest in, it's how we can invest as well, because we have lots of limits in the UCIT structure on the concentration and the diversification requirements of the portfolio. So lots of considerations on the investment side.

SPEAKER_01 6:34

And just to focus on UCIS a little bit more, you mentioned there about the post-Brexit position um for EU and UK cross-border distribution. We still have the term USICS in the UK that everyone's still using as if it were never changed, but of course it is different because, as you say, it's UK USICS now. EU UCITs are still just USICs. Um, we talk to a lot of people who are either UK-based and just distributing throughout the UK. We talk to UK-based who want to distribute into Europe, and we talk to even more who were European and want to distribute into the UK. So, what does that sort of USITS structure look like from a distribution cross-border distribution perspective now post-Brexit?

SPEAKER_00 7:16

Yeah, absolutely. And the picture is a lot more complicated. Previously, you could have a UCIS anywhere in the EU, of course, before Brexit, that meant that you could then sell that that fund very easily into the UK. Now we have uh a different way in which you sell into the UK from the EU and then from the UK going the other way. So as an for an EU UCITS, so set up in a in a fund centre like Dublin or Luxembourg, that has the ability to distribute under the marketing passport across the EU, so across the 27 member states. That's relatively unchanged post-Brexit and a very well understood structure. The difference is distributing that EU usage fund in the UK. And here we have the overseas funds regime or the OFR, which is the framework that the UK and the Treasury and the FCA have introduced, which requires the EU uses funds, so the Dublin or Luxembourg fund to effectively jump through a few more hoops, to put it simply, to be able to distribute that product in the UK. And one of those hoops is getting the recognition under the overseas funds regime uh from the FCA uh with various requirements that need to be met. Yeah. Yeah.

SPEAKER_01 8:34

And one interesting outcome, I think, from the OFR regime is that if you are an EU USIS manager, you've got an established EU USIS fund and you want to distribute that into the UK. But previously you were under the tempered permissions regime. So between Brexit and the OFR coming in, it was 10 permissions regime. You didn't have to do anything, you didn't have to pay anything. You were just already here, you carried on marketing and distributing, everyone was happy. Then OFR came along, and now you've got to pay the regulator, you've probably got to pay uh a law firm or a consultant to do some of your scheme docs. Um, you may have to pay someone like Xero, a section 21 approver to do your marketing. So there's money to be paid now to carry on doing what was previously free. However, to those people that are in the UK already, they will probably see, I think, it being easier to bring an EU UCIS to market in the UK and cheaper than it is to set one up in the UK from scratch.

SPEAKER_00 9:33

Yeah, and and that's an interesting policy outcome, if we want to call it that. I want to pick up on one of the points you mentioned there and then add an additional uh point which is relevant to what you've just said. One of the additional hoops that you need to jump through as an EU UCITS that wants to distribute in the UK under the uh overseas funds regime is to have a financial promotion approver, so a section 21 approver like zero, if you do not have basically a group company that is in the UK that's authorised by the FCA. And that's an additional sort of marketing cost, if you if you want to call it that, but an additional regulatory hoop that you need to jump through. Probably one of the most pronounced um differences between distributing an EU UCIS into the UK and setting up a UK UCIS, I think is probably the value assessment requirement. So we have in the EU this concept of um undue costs, as it's called, which is something that ESMA, the European Securities and Markets Authority, so the pan-EU regulatory authority has done a lot of work on. Um and undue costs are really trying to determine the costs that shouldn't be charged under fairness to investors in a USIS. The UK has the value assessment requirement. That's been a requirement for UK retail funds for several years now, and there are several criteria that you need to assess the value of your your fund against and produce a report that you update uh on an annual basis for that. That that is an additional requirement that a UK UCITS will need to meet, um, but uh an EU UCIS won't need to comply with that term value assessment um requirement. So there is a difference there between the two. Um but Wayne, what's the kind of what's the thought process then as to why would you set up an EU UCITS versus a UK UCITs? What are what's the determining factor from a distribution point of view that's gonna drive that decision?

SPEAKER_01 11:36

I think if you're um if you're already in the UK and your customer base or your potential customer base, your target market is in the UK, then that's a reasonably straightforward decision, right? So you're gonna want to be a UK business. And that's also because the decision makers in that investment process, the advisors, wealth managers, the even the D2Z retail platforms that you want to list on are going to expect to see that UK UK base for a fund. However, we deal with a lot of global uh portfolio managers, so global might mean European, we've talked about it. Also, includes a lot of portfolio managers in the in the US, we've got Singapore, we've got Hong Kong. There's global managers out there that want to come into Europe who used to see Europe as one place, including the UK. Now we have to remind them that they're two separate jurisdictions. So if you've got a global investor base, you're not based in the UK, you want to get distribution in a number of different jurisdictions, the most common route is to go either Dublin or Luxembourg, EU USIC products, and then passport into the UK via the offshore funds regime. That's the most cost-effective way of uh of doing that.

SPEAKER_00 12:48

Okay. And so are we are we then thinking that a UK USICS, the decision to set up a UK USICS is because we're viewing that distribution proposition more as a domestic UK market proposition. Because I guess if we are distributing a UK USICS in the EU, so let's say we have a UK USICS that we want to sell into France, um, France, the French regulator, the AMF, would consider that to be uh effectively an alternative investment fund, a retail alternative investment fund, even though it's a UCIT because it's uh it's coming now from outside of the EU, from you know a third country like the UK, sort of in into France. So it's a very it's almost a competitive disadvantage from a regulatory point of view to be distributing UK UCIS um into the EU. Um and so that's a that's an important sort of decision point, I think, that we often see um maybe isn't thought about early enough in the process. So what is our our kind of target market um and thinking about that? So that's one piece of the regulatory kind of puzzle. We talk quite a lot about usits, I guess we should talk about kind of everything else, so just non-USICs um or alternative investment funds as we we sometimes um think about them. So why when I mean why would you why would you set up an alternative investment fund and why would you go the non-USICS route then rather than than the usage route?

SPEAKER_01 14:11

Uh uh essentially because what you want to invest in, so your your portfolio mandate, what you're good at, um where your target market uh want to gain investment exposure just doesn't fit within the restrictions of a USICS structure. So, like you said at the start, usage structures are more restrictive than uh non-USICS structures, so you're limited in what you can invest in, you're limited in the uh proportion of investments that you can put into any particular asset or asset class, so the the spread of risk can be uh much narrower than it than it needs to be for a USICS product. Yeah. Um, but of course, with that then come some other restrictions on who you can sell to and and how you get to those people. Yeah.

SPEAKER_00 14:55

And when we think about kind of non the non-UsICS bucket, if you like, so we'll we'll just call these alternative investment funds um typically regulated in the EU historically under the Alternative Investment Fund Managers Directive, and um, you know, that's that's been revised now. We now have a second version of that. Um, within that alternative investment fund bucket, we often find in different jurisdictions that there will be a retail version of an alternative investment fund and then a sort of non-retail version. So in the UK, um, and this is just so many acronyms here, but we have uh what we call a non-USICS retail scheme, a NURSE, um, an NURS, uh, if we want to put the acronym around, which is a type of alternative investment fund. We see something similar, for example, in Ireland we have the retail investor, AIF, retail investor alternative investment fund. Same kind of idea that we have. It's an alternative investment fund, but the local regulator, the local jurisdiction has created a kind of retail version, you know, of that. Um, so why would we use some like a retail version of that alternative investment fund rather than let's say a professional version? Like what's the decision point there for us? What's the what's the determination?

SPEAKER_01 16:09

So bluntly, the market's bigger, so you can get more assets. That's that's basically why you would be you would be doing that. So if you go uh more professional, okay, so more alternative, so non-UCIT is kind of one degree of alternative away from a full UCIT, right? And it's it's retail accessible uh to a degree, then what you start to find there is that you can get it listed on more retail-facing platforms, for example, okay, because they're less nervous about what it's going to do because it has still got more restrictions than a fully professional, fully alternative um fund, and there's less for them to do when they're qualifying investor types and doing appropriateness and suitability tests and so on. Okay. What it also brings then is uh into scope are some more of the rap products that it can fit into. So um some of them will be able to be uh invested in through an ISA, some will be accessible via a SIP, and that depends on how how re how retail it is versus how very professional it is. So your market is is grown a lot a lot wider on that.

SPEAKER_00 17:13

And just to again put some names around this and some acronyms. So in the UK, um we we mentioned already the non-UCITS retail scheme. So this is a type of alternative investment fund designed really for retail investors. There's also, for example, the qualified investor scheme, the quiz, as we call it, which is the kind of professional version of the alternative investment fund. Um we're going to get on and talk in a moment about how regulators think about sort of fund applications. But we've talked a lot about these kind of structuring questions and determining what kind of which is the is the is the structure. Um is it is it fair to say that um you know if we put an application together, we go through the regulations and the rules, and we're kind of quite happy that you know everything's kind of compliant. Uh, you know, we think our investment proposition is amazing, of course, because we wouldn't be creating a fund uh you know and and and bringing that to the wider world. Is it kind of reasonable to assume then you know it's compliant, we're gonna submit that to someone like a regulator like the FCA, and we're kind of all good. You know, they're they're just gonna go through, yeah, uh, you know, checking the boxes, this is all compliant, we're we're all good, and we can get it authorised.

SPEAKER_01 18:22

I think the key the key term you use there that means the answer is no, is checking the boxes. Okay. So what no regulator's doing is just checking the boxes or ticking the boxes, it's a much more uh in-depth piece of review and scrutiny than that. So they're gonna want to know if we work through the things that we've talked about, where's this objective come from? Is it does it have enough um specificity about the asset universe, the extent to which we'll invest in different assets? Is it clear how you compare it versus anything else, or how you assess if it's done well or whether it's done poorly? So benchmarks basically, how do I know what it's doing here? Um they're gonna want to know that in detail. Is it appropriate? They're gonna want to see model portfolios that match what it is that you'll say you're gonna do. They want to know that that's been stress tested. So great, you've done a portfolio, it looks really brilliant. But what if you know there's another uh 2008, there's another um uh military action taken globally, geopolitics, effect markets, what happens in those circumstances? Does it still behave how you would um expect it to? Um they're gonna test it against the structure you've used. So if you're going the UCITS route, then of course, does it fit within the borrowing powers, investment and borrowing powers sorry, of uh of a UCIS structure? If it's going to be um an alternative fund or a non-uh retail fund, then how are you distributing it? Who to, how do you make sure those are the people that are getting it, that it's not going to the wrong people. Okay. So it starts to really deep dive. So on the very surface, yeah, there's a lot of difficult decisions to make about the structure, how that fits with your capability from an investment perspective, and how you're going to sell it to the market, but then it goes a layer deeper when it gets that in front of a regulator.

SPEAKER_00 20:15

So you you've talked about the kind of in the investment piece there and benchmarks and model portfolios, so the investment thesis, and I guess to put that just in simple terms, you know, does that check out effectively? Does that does that check out with how that's been described? Is that something that a retail investor is going to understand if it's a retail focused fund? You've also talked about the distribution piece there, and we have this concept in regulation of a target market where we are determining from the outset who we think the fund is intended for, and then uh you know, measuring whether actually that that distribution is being measured, um, is being achieved in reality. Um I just wanted to ask you about fees, because this is a you know, we're creating a fund here from a commercial perspective. We we need to make money on this, um, uh, you know, and so we we need a fee that's going to allow us, of course, to cover costs and all of that, but actually make a profit. Um, kind of how does the FCA think about fees when they're assessing a new fund application?

SPEAKER_01 21:12

There's two there's two elements to it, isn't there? The the one that is most talked about and understood now in the UK is value. So it's not it's not about cost. So quite helpfully when the value assessment regime came out, they didn't talk about um just cost. It wasn't this wasn't a cost regulating exercise, this was value regulating exercise. Sounds like the same thing, but actually it gives you a little bit more scope to say why the charges that you apply deliver value and aren't just a cost and compare it to what everyone else is is doing. But in reality, what you're trying to say is the value we think we deliver, so the performance outcome basically is this is X, and the cost that we're charging is Y. And the reason that that delivers value is because it's a reasonable uh difference between the two. Uh and then that will also include some comparison with the market. It's it's a bit of an odd kind of contradiction here where the regulators saying no, we're not we're not regulating costs here, we're not saying they should all be below a certain amount or there's a benchmark or anything. But by the way, what else could you buy instead and how does that look? So actually it is a bit of a cost exercise. But then the other factor that they look at in particular, and something that we find comes up quite a lot with EU funds distributing into the UK and going through the OFR application process is who are you paying money to? Not just direct from the fund but from parties who receive money from the fund. So if a manco receives a particular fee and they pay that on to someone else, they could want to know who it is you're paying it to and why are you paying it because what they don't want to see is um, for example, advisors being paid commissions from the fund because that starts to they think incentivize uh flows of client assets into those particular funds, like we had pre-aria in the in the UK.

SPEAKER_00 23:06

Yeah. And there's these fees are costs and charges are really actually quite a challenging area. Um a lot of scrutiny at the retail distribution review, you know, many years, many many. You know, a decade and a half ago, actually. Um so that was um effectively removing that commission bias and the bundling of distribution fees. Um you mentioned a few other elements to that. That there is a I think a benchmarking there, if I can use that term, that the FCA will do in terms of how this fund sits against other other funds. Um, you know, I've seen a lot of of I think fund managers say, well, look, actually we're charging a higher fee because you know the performance is that good, and actually it's just a small extra fee because we're we're getting all of that that additional performance. And that's uh something I think the FCA will will scrutinize. They won't necessarily say no to that, but but there needs to be you know a justification for that. The other I think piece that the SCA is focused on and is the indeed one of the criteria for value assessment is economies of scale. And I think this expectation actually comes from the from the American industry historically that as funds grow in size, those kind of marginal costs should should shrink. So things like depository services or custody fees, you know, should uh on a marginal basis reduce as the fund gets bigger to try and um uh at least leverage some of those economies of scale that I think the FCA is thinking should be passed on to retail investors. So it's a really, really complicated area and um certainly an area I've seen a lot of scrutiny from the FCA in. Um you're right that there isn't a sort of price uh regulation, you know, that the FCA hasn't said the number needs to be below three or two or one or whatever it may be for certain types of funds, but I think we do see um increased justification where you know there are fees that are significantly higher than comparable funds.

SPEAKER_01 25:01

Yeah, and I've I've had interactions in the past with the regulator who've made direct comparisons. So they've said you've got a product here that's charging X basis points. Uh we've found this one that's significantly cheaper. Tell me why. So behind the scenes, there is direct comparison with cheaper products. It's and as you say, they're not necessarily saying you can't do that, you can't be more expensive. That's not what they're saying. What they're saying is why are you more expensive? Justify that additional expense. And to pick up on that earlier point as well, about our performance is so much better than everybody else's, so of course we should be able to charge more. On the one hand, kind of philosophically, I kind of agree that if you are that good, then people are going to pay extra, they're going to pay a premium for a significantly better outcome. But taking off a kind of fund buyer looking for a good outcome hat for a minute and putting on a regulatory hat for a second, actually, what a higher fee, all the higher fee does is guarantee it will be harder for you to repeat that out performance in the future because your charges are going to erode your future performance more than the cheaper funds charges are going to erode performance. So it's a difficult, it's a difficult argument to make, really.

SPEAKER_00 26:13

And and just bring to bring this back to our earlier discussion about distributing EU funds in the UK, one of the differences that we highlighted earlier was that EU UCIS that are being distributed in the UK under the overseas funds regime, they don't have to produce a value assessment. So they they don't have to produce the report. We actually see some managers have done that. Um and there's also been some expectation from some of the distributors that that that's done, but that's not a regulatory requirement in the way that it is for UK UCIS. But actually, from a fees point of view and a costs and charges point of view, although we have different concepts here, we have the UK having its value concept that the FCA has introduced, and then the EU with its undue costs constraint for UCITs. Actually, I think what we're saying then is if we have an EU USIS that wants to be sold in the UK, that's gonna be viewed through almost a value lens by the FCA when they're thinking about recognising that fund under the overseas funds regime. So I mean, does that mean that we're actually seeing a bit of convergence there in the way regulators are thinking about that? Um, and when we're thinking actually, you know, we're gonna launch this EU UCIS fund and the UK is gonna be one of the markets that um we're targeting, do we need to do that fee comparison, the cost and charging comparison with kind of the UK market as well as the EU market?

SPEAKER_01 27:40

Yeah, yeah. I think the the UK market has often been the kind of gold standard for regulation. That doesn't mean I'm saying it's better or worse, but in terms of its its its impact and the the level of detail and how much effort they go to, that's kind of what it's been. And then Europe generally will take some of that, so undue cost versus value assessment, yeah, start to follow it and then build on that. It's like they want to see how it pans out in the UK before they go all that way over here. But if you are looking at doing EU use distributed into the UK versus UK only, then I would say that the EU use it into the UK, it's a good exercise to maybe go through the fuller coal version of a full value assessment to see how you would look and where you would land and how that feels. If you pass muster on that and you're comfortable internally, then you're gonna have the EU market pretty well dealt with anyway, because of that extra layer of scrutiny that exists in the in the UK market. However, if you do that and you don't like what you see, or there are things that you want to pay out of a fund that you can't if you come to the UK, then that's probably gonna drag your decision a little bit. Yeah, okay.

SPEAKER_00 28:53

Yeah. And the the the coal rules are the um you know the FCA's rules where the value assessment criteria you know are kind of set out that you need to think about. Okay. I mean, there's lots of kind of elements we've talked about here in terms of the regulatory puzzle. Um, I think we focused a lot on um the investment piece, so what the the fund is investing in, the distribution piece, so who we are targeting, um, both in terms of the investor type, or we're thinking about mass market retail versus sophisticated retail or professional and like, you know, what's our target market there? Um and we talked about costs and charges and fees. Is there anything else that we've kind of missed that that the SCA or other regulators look at um when they're assessing fund applications? Those are those are like the key bits.

SPEAKER_01 29:37

So when we talk about designing a fund, then where am I going to go with this and and etc., those are the main bits that are gonna cause you the biggest headaches um that need the most attention to them because that's that's basically affecting your fundamentals. What do I invest in? Yeah, who do I sell it to and where are they? There's there's not there's not really three bigger things than that. But the one thing that I think we perhaps haven't talked about that firm that that that firms need to think about is the firms themselves. Yes. So are you are you competent? Who who is doing the portfolio management? Where are they based? Who are they regulated by? Because it's not necessarily a given that a portfolio manager in the uh in a UK use it, has to be UK authorised. There are there are different options for that. Same with UK with EU UCIS, yeah. But who is doing that? Who is their regulator? Are they up to standard? Would the FCA be happy with that? Who's providing the various other services in respect of that or permissions if they got, who are the people behind the scenes, how much time is being spent, that that I think is the bit that will be dug into that we've not touched on.

SPEAKER_00 30:41

Yeah, okay, and and to put some some some flesh around that, what I think we're talking about a few elements there. We're talking about the the the management company, so we can think about that either as the USICS management company in a in an EU USICS context, or the alternative investment fund manager. We we call that the authorised corporate director, you know, the ACD, for example, in the in the UK, all effectively the same concept. It is that the the entity that's regulated that is performing the core you know marketing administration and portfolio management and risk management sort of pieces of that. Um so there's the considerations, all as you were describing, around the fitness and and propriety of the of the senior management team, um, the board, the organization of that. We then have to think about service providers as well. You've mentioned the portfolio manager being you know a critical one if we have a third-party portfolio manager that we're we're delegating to. But I guess we should also talk about the depository and the administrator, the transfer agent there, the value if there is one. Um and then we need to think about um you know all of the sort of the way in which which those structures fit together. Is there delegation across border? And I think this is something we see regulators like the Central Bank of Ireland or the CSSF in the EU, the FCA. You know, it's not just a kind of substance question. You know, do you have people on the ground doing certain things? It's how all of those things kind of kind of fit together. So that's a whole kind of other piece. We talked a lot about the product, the regulatory puzzle. I guess we could we could spend another 30 minutes talking about the kind of regulatory puzzle on the you know on the actual management company, the ACD. Yeah kind of stuff.

SPEAKER_01 32:18

Yeah, and and I think as you were talking there, I I recognise the fact that there probably is another 30 minutes and that we should spend 30 minutes talking about it in a different podcast because this is not the time to extend it. But you're right, there's there's um there's a whole bunch of other parties. We kind of talk like we are speaking on behalf of or to the portfolio manager primarily, because they tend to also be the distributor. So they're the ones with the idea, they're the ones with the customer base, or that are gonna go out there and find the customers. Uh, they're the ones who are then going out to the different providers, you know, who is gonna be my manco or my ACD, uh, and how am I going to structure this thing um that I want to take to markets? But uh yeah, that's that's a that's a big one and probably a more complicated question than uh than we can deal with in the time. Yeah, absolutely. Okay, great. Super, okay. Good. Thank you, Charles. Thank you very much.