Securities

This page covers:

• Definition of Securities 
• Regulation of Securities Investment Business 
• Categories of Regulation 
• Standards of Regulation 
• Recognised Overseas Regulatory Authorities and Approved/Recognised Stock Exchanges 

 Definition of Securities

In Schedule 1 of the Securities Investment Business Law (2011 Revision) securities are defined as:

1. shares or stock of any kind of the share capital of a company;
2. debentures, loan stock, bonds, certificates of deposit and any other instrument that creates or acknowledges debt (excluding various banking and monetary instruments e.g. cheques, mortgage instruments and land charges);
3. warrants and other instruments that allow the holder to subscribe for certain securities;
4. certificates or other instruments which confer contractual or proprietary rights;
5. options on any security and on any currency, precious metal or an option on an option;
6. futures;
7. rights under contracts for differences (e.g. cash-settled derivatives such as interest rate and stock index futures, forward rate agreements and swaps).

Regulation of Securities Investment Business

The Securities Investment Business Law (2011 Revision) (SIBL) provides for the regulation of persons carrying on securities investment business, including market makers, broker-dealers, securities arrangers, securities advisors and securities managers, in or from the Cayman Islands. (See: What are regulated activities? under Securities FAQs.)

Under the SIBL, the Cayman Islands Monetary Authority is directly responsible for licensing, and for supervision and enforcement in respect of licensees. It is also responsible for the investigation of persons where it believes that they are, or have been, undertaking securities investment business without a licence to do so ('policing the perimeter'). CIMA's powers and duties are more particularly set out in sections 16 and 17 of the law, and under section 18, CIMA can apply to the Grand Court for injunctions and restitution and disgorgement orders.

The processing of licence and registration applications and the ongoing supervision of securities investment business licensees is the responsibility of the Investments and Securities Division of CIMA.

Categories of Regulation

The SIBL provides a licensing regime for persons engaging in securities investment business as defined in the law, unless otherwise exempted under Schedule 3 (Excluded Activities) or Schedule 4 (Excluded Persons). Persons engaged in securities investment business must either hold a:

• Securities Investment Business Licence, or be
• Registered as an Excluded Person.

In determining whether a person is engaged in licensable activity, regard must be had to the definition of 'securities' in Schedule 1 of the SIBL. Note that the law enables the schedule to be amended by the Governor in Cabinet.

Standards of Regulation

CIMA regulates securities investment business in accordance with:

• the SIBL and its regulations, namely
  • The Securities Investment Business (Licence Applications and Fees) Regulations, 2003; 
  • The Securities Investment Business (Conduct of Business) Regulations, 2003; and 
  • The Securities Investment Business (Financial Requirements and Standards) Regulations, 2003; 
   
• the relevant rules, guidance, policies and procedures issued by CIMA - see Securities Index of Measures, and
• international supervisory standards issued by the International Organisation of Securities Commissions.

Recognised Overseas Regulatory Authorities and Approved/Recognised Stock Exchanges

The SIBL requires the Cayman Islands Monetary Authority to  specify overseas regulatory authorities and stock / securities exchanges that are "recognised" for the purposes of the law.

Click here to view the List of Recognised Overseas Regulatory Authorities.

The criteria that CIMA applies in order to determine whether a stock exchange is “recognised” is set out in Appendix G12 of CIMA's Regulatory Handbook Appendices.