What is a designated investment exchange?

A designated investment exchange refers to an overseas exchange that is recognized under UK regulations, specifically allowing for certain activities without the need to be authorized in the UK. The concept typically involves exchanges that are well-regulated and maintain standards similar to those of UK exchanges, providing a level of trust and oversight that aligns with the Financial Conduct Authority's (FCA) principles.

Option C indicates that the exchange is well-regulated and excluded from UK activities, which captures the essence of what is meant by a designated investment exchange. This designation is important as it allows UK investors to engage with these exchanges while being assured that these platforms adhere to a respectable level of regulatory oversight, even though they operate outside UK jurisdiction.

In contrast, the other options either mischaracterize the nature of the exchange in terms of regulation and access or suggest an exchange that does not fit the criteria of a designated investment exchange, such as being unregulated or directly serving UK clients without the necessary oversight. The distinction lies in ensuring that the exchanges maintain appropriate regulatory standards while being excluded from direct UK regulatory control.