Securities business is regulated by the Securities Investment Business Law (2011 Revision)('SIBL'). Schedule 1 of the SIBL defines 'securities' as:
- shares or stock of any kind of the share capital of a company;
- 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);
- warrants and other instruments that allow the holder to subscribe for certain securities;
- certificates or other instruments which confer contractual or proprietary rights;
- options on any security and on any currency, precious metal or an option on an option;
- 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
SIBL regulates natural or corporate persons carrying on securities investment business, including market makers, broker-dealers, securities arrangers, securities advisors and securities managers, in or from the Cayman Islands.
The Cayman Islands Monetary Authority ('CIMA') is directly responsible for licensing, supervision and enforcement. CIMA may investigate persons whom are believed to be undertaking securities investment business without a licence.
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.
Regulated Business – Categories
There are 2 categories to be considered, namely licenced persons and excluded persons. Persons engaged in securities investment business must be:
- the holder of a Securities Investment Business Licence, or
- 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.
'Excluded Activities' are set out under Schedule 3 SILB and a list of 'Excluded Persons' can be found at Schedule 4.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.