Securities Licensing Requirements

Licensing vs. Registration

In accordance with the Securities Investment Business Act (SIBA), persons engaging, ‘in the course of business’, in securities investment business, as defined in the SIBA, must be licenced unless exempted  pursuant to Schedule 3 - Excluded Activities or Schedule 4 - Registered Persons. Registered Persons must be registered by the Cayman Islands Monetary Authority.

In determining whether a person is engaged in licensable or registrable 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.

Disclaimer:

Please note that entities registered as Registered 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 SIBA. however they are to be registered by the Authority.

Registered Person Registration Requirements

Schedule 4 of the Securities Investment Business Act outlines the categories of persons "Excluded Activities" engaging in securities investment business who are excluded from the requirement to be licenced.

Section 5(4) of SIBA 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 Authority Fee Schedule for the annual fee amount.

In order to register, such registered persons must:

• complete and submit to CIMA the Annual Declaration Form for Registered Persons, 
• submit any other information requested by the Authority for the purposes of assessing the application; and
• submit the required fee. (Refer to Authority Fee Schedule).

The Authority will review the submission and, if 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 "Registered Persons" as set out in Schedule 4 of the SIBA are those to whom section 4(1) of the act 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.

Licensing Requirements

All applications for licensing pursuant to section 5(1) of SIBA should be submitted to CIMA and follow the requirements set out in the Securities Investment Business (Licence Applications and Fees) Regulations. Based on these regulations CIMA’s Securities Supervision Division ("SSD") has created an electronic licence application form and a checklist to assist applicants.

Acceptance of Licence Applications

Prior to reviewing the securities investment business licence application, the application fee(s) and all relevant and necessary documentation must be received by the Authority from the applicant. Once all relevant information has been 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/ considered  and will be returned until all necessary documentation is duly provided.

Formal Review of Applications

In deciding on whether or not to grant a securities investment business licence, the Authority will consider the following, but not limited to, factors:

• Will the applicant be able to comply with the provisions of the SIBA and Regulations?
• Will the applicant be able to comply with the Anti-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?

The Securities Supervision 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 Act.

Recognised Stock Exchanges

Section 6(7) of the SIBA allows CIMA to impose conditions on a licensee. These include "requiring the licensee 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 securities investment business licence, with or without conditions, the SSD will typically notify the applicant within seven days of the decision. A certificate for the SIBA licence will then be issued after the Authority has received the licence fee(s) as prescribed in Schedule 2 of the Regulations, along with the requisite documentation as/if specified by the Authority.

Once the Authority has determined that a Notice of Decision is to be issued, such notice will:

1. be in writing;
2. clearly state the decision taken by the Authority;
3. clearly state the Authority’s reasons for taking the action to which the Notice of Decision relates; and
4. clearly state the date the Authority’s decision is effective.

Recording, Publication and Notification

After the Authority has issued the certificate for the new SIBA licence, the SSD will then update the  SIB list of licensees on the website to include the new licensee’s name, business address and details of permitted activities.