Definition of Securities

In Schedule 1 of the Securities Investment Business Act (SIBA) 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 Act 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 SIBA, 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 SIBA, 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 Securities Supervision Division.

Categories of Regulation

The SIBA provides a licensing regime for persons engaging in securities investment business as defined in the SIBA. Persons engaged in securities investment business must hold a Securities Investment Business Licence.

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

Standards of Regulation

CIMA regulates securities investment business in accordance with:

• The SIBA and its regulations, namely
  1. The Securities Investment Business (Licence Applications and Fees) Regulations, 2003;
  2. The Securities Investment Business (Conduct of Business) Regulations, 2003; and
  3. The Securities Investment Business (Financial Requirements and Standards) Regulations, 2003;
• 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 SIBA requires the Cayman Islands Monetary Authority to specify overseas regulatory authorities and stock / securities exchanges that are "recognised" for the purposes of the SIBA.

Click the following link to view the List of Recognised Overseas Regulatory Authorities:

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 CIMA's Regulatory Policy for Approved Stock Exchanges.