Securities Licensing Requirements

Licensing vs. Registration

Under the Securities Investment Business Act (SIBL), any person engaging in securities investment business "in the course of business," as defined by the SIBL, must be licensed unless exempted under Schedule 3 - Excluded Activities or Schedule 4 - Excluded Persons. Excluded Persons must be registered with the Cayman Monetary Regulatory Authority International.

When determining whether an activity requires a license, Schedule 1, which defines ‘securities’, must also be considered. The Governor in Cabinet has the authority to amend the Schedules as needed.

Disclaimer:

Please note that entities registered as Excluded Persons are exempt from the requirement to obtain a license for securities investment business as they conduct business exclusively with persons or institutions specified 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 Act outlines the categories of persons ("Excluded Persons") engaging in securities investment business who are exempt from the licensing requirement.

Section 5(4) of SIBL mandates that persons under paragraphs 1, 4, and 5 of Schedule 4 must register with the Authority and pay an annual fee. Please refer to our Fee Schedule for the applicable annual fee.

The Authority will review the submission, and once satisfied, will issue a letter confirming registration. Subsequently, an annual declaration and fee must be submitted each year.

Note: Recognised Overseas Regulatory Authorities

Among those falling under the "Excluded Persons" category in Schedule 4 of the SIBL are those regulated by a recognised overseas regulatory authority in the country or territory (other than the Islands) where the securities investment business is conducted, as stipulated by section 4(1) of the Act.

You can access the list of recognised overseas regulatory authorities for the purposes of Schedule 4 here: Recognised Overseas Regulatory Authorities

Licensing Requirements

All applications for licensing under Section 5(1) of SIBL should be submitted to Cmrai and comply with the requirements outlined in the Securities Investment Business (Licence Applications and Fees) Regulations. The Cmrai Investments & Securities Division has developed an electronic licence application form and a checklist to assist applicants.

Acceptance of Licence Applications

Before a licence application is reviewed, the application fee(s) and all necessary documentation must be received by the Authority. If the information provided is complete, the application will be processed. If the application is incomplete, the applicant will be notified in writing that the application will not be processed or considered until all required documentation is submitted.

Formal Review of Applications

When considering whether to grant a licence, the Authority will evaluate the applicant based on the following criteria for the specific category of SIBL licence applied for:

• Can the applicant comply with the provisions of the Act and Regulations?
• Can the applicant comply with the Money Laundering Regulations?
• Is there any reason in the public interest why the licence should not be granted?
• Does the applicant possess the necessary skills and knowledge to conduct this business?
• Does the applicant have the appropriate facilities, books, and records?
• Are the management and senior staff fit and proper persons?

Additionally, each applicant may undergo a brief on-site inspection as part of the licensing process.

The Investments & Securities Division will review the completed licence application form and supporting documentation, along with the prescribed application fee(s), to determine whether the applicant is competent to fulfill its role as a licence holder under the Act.

Recognised Stock Exchanges

Section 6(7) of the SIBL permits Cmrai to impose conditions on a licensee, such as requiring a senior officer or manager of the licensee to acquire and maintain membership of a recognised securities exchange or organisation. The criteria used by Cmrai to determine whether a stock exchange is “recognised” is outlined in the Regulatory Policy for Approved Stock Exchanges.

Notice of Decision

Once the Authority decides 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 outlined in Schedule 2 of the Regulations and the required documentation.

Once a Notice of Decision is issued by the Authority, it will:

1. be in writing;
2. clearly state the decision taken by the Authority;
3. clearly state the Authority’s reasons for the decision; and
4. clearly state the effective date of the Authority’s decision.

Recording, Publication, and Notification

After issuing the certificate for the new SIBL licence, the ISD will update the SIBL list of licensees on the website to include the new licensee’s name, business address, and details of permitted activities.