Securities Licensing and Authorisation Requirements
This page covers:
Licensing vs. Registration
In accordance with the Securities Investment Business Law (SIBL), persons engaging, ‘in the course of business’, in securities investment business, as defined in the SIBL, must be licenced unless exempted under Schedule 3 - Excluded Activities or Schedule 4 - Excluded Persons. Excluded Persons must be registered by the Cayman Islands Monetary Authority.
In determining whether a person is engaged in licensable activity, regard must also be had to Schedule 1, which defines ‘securities’. The Governor in Cabinet has the power to amend the Schedules from time to time.
Please note that entities registered as Excluded Persons are exempted from the requirement to obtain a licence to conduct securities investment business as they conduct business exclusively with persons or institutions as set out in Schedule 4 of the SIBL and are therefore not regulated by the Authority.
Excluded Person Registration Requirements
Schedule 4 of the Securities Investment Business Law outlines the categories of persons ("Excluded Persons") engaging in securities investment business who are exempted from the requirement to be licenced.
Section 5(4) of SIBL requires persons to whom paragraphs 1, 4 and 5 of Schedule 4 applies to register with the Authority and pay an annual fee. Please refer to our Fee Schedule for the annual fee amount.
In order to register, such excluded persons must:
The Authority will review the submission and, once satisfied, will issue a letter confirming the registration. Thereafter, the annual declaration and fee must be submitted each year.
Note: Recognised Overseas Regulatory Authorities
Among the persons falling within the category of "Excluded Persons" as set out in Schedule 4 of the SIBL are those to whom section 4(1) of the law applies but who are "regulated in respect of securities investment business by a recognised overseas regulatory authority in the country or territory (other than the Islands) in which the securities investment business is being conducted."
The list of overseas regulatory authorities that are recognised for the purpose of Schedule 4 can be accessed here: Recognised Overseas Regulatory Authorities.
All applications for licensing under Section 5(1) of SIBL should be submitted to CIMA and follow the requirements set out in the Securities Investment Business (Licence Applications and Fees) Regulations, 2003. Based on these regulations CIMA’s Investments & Securities Division has created an electronic licence application form and a checklist to assist applicants.
Acceptance of Licence Applications
Prior to reviewing the licence application, the application fee(s) and all relevant and necessary documentation must be received by the Authority from the applicant. If the information has been correctly provided, the application will be reviewed. If the application is incomplete, the applicant will be notified in writing that the application will not be processed or considered until all necessary documentation is duly provided.
Formal Review of Applications
In deciding on whether or not to grant a licence the Authority will consider, in relation to the specific category of SIBL licence applied for, the following factors:
- Will the applicant be able to comply with the provisions of the Law and Regulations?
- Will the applicant be able to comply with the Money Laundering Regulations?
- Is there any reason why, in the public interest, the licence should not be granted?
- Does the applicant have the necessary skills and knowledge to undertake this business?
- Does the applicant have the appropriate facilities and books and records?
- Are the management and senior staff fit and proper persons?
Additionally, every applicant for a licence may undergo a brief on-site inspection.
The Investments & Securities Division will consider the completed licence application form and supporting documentation, together with the prescribed application fee(s) submitted by the applicant to determine whether the applicant is competent to fulfil its role as a licence holder under the Law.
Recognised Stock Exchanges
Section 6(7) of the SIBL allows CIMA to impose conditions on a licensee. These include "requiring the or a senior officer or manager of the licensee to acquire and maintain membership of a recognised securities exchange or a recognised securities organisation." The criteria that CIMA applies in order to determine whether a stock exchange is “recognised” is set out in CIMA's Regulatory Policy for Approved Stock Exchanges.
Notice of Decision
Upon the Authority’s decision to grant the licence, with or without conditions, the ISD will notify the applicant within seven days of the decision. A certificate for the SIBL licence will then be issued after the Authority has received the licence fee(s) as prescribed in Schedule 2 of the Regulations, and the requisite documentation.
Once the Authority has determined that a Notice of Decision is to be issued, such notice will:
- be in writing;
- clearly state the decision taken by the Authority;
- clearly state the Authority’s reasons for taking the action to which the Notice of Decision relates; and
- clearly state the date the Authority’s decision is effective.
Recording, Publication and Notification
After the Authority has issued the certificate for the new SIBL licence, the ISD will then update the SIBL list of licensees on the website to include the new licensee’s name, business address and details of permitted activities.