Guidance for Prospective Applicants for Licensing and Registration (Investment Business)

Summary

This is Bermuda Monetary Authority guidance explaining the licensing and registration framework for investment business under the Investment Business Act 2003. It sets out who must be licensed or registered, the categories of licence and registration available, the application process, and the ongoing supervisory requirements the Authority applies to investment providers.

• Licensing categories: Persons carrying on investment business in or from Bermuda must apply for either a standard licence or a test licence (for use within the Authority's regulatory sandbox), unless eligible for registration or designated a Non-Registrable Person.
• Registration categories: Bermuda-formed persons without a local place of business who are regulated by a recognised foreign regulator must register as a Class A Registered Person; certain persons serving institutional/sophisticated investors or 20 or fewer private clients may register as Class B Registered Persons under the Investment Business (Class B Registered Persons) Order 2022.
• Non-Registrable Persons: The Minister has designated certain persons and classes of persons (including investment funds) as Non-Registrable, exempting them from obligations under the Act.
• Place of business: Licensed persons and Class B Registered Persons must maintain a principal place of business in Bermuda; Class A Registered Persons must appoint a Bermuda-resident senior representative with an office in Bermuda.
• Application process: Applications are assessed by the Authority's Assessment and Licensing Committee against requirements described in Section III of the guidance.
• Supervisory process: Licensed and registered persons are subject to reporting requirements, statutory returns, prudential visits, on-site supervision, auditor communication obligations, information disclosure rules, and potential consolidated group supervision.
• Related instruments: The Authority has also issued a Statement of Principles, a Code of Conduct and Practice, and Rules under Section 10A on net assets, capital, liquidity and statutory return filings, which supplement this guidance.

The guidance also clarifies scope questions via FAQs, such as how BMA interprets carrying on activities continuously, group/joint enterprise exclusions, and that digital asset derivatives fall under the Digital Asset Business Act rather than the Investment Business Act.

Key obligations

• Persons carrying on investment business in or from Bermuda must obtain a standard licence, a test licence, or register as a Class A or Class B Registered Person, unless designated a Non-Registrable Person.
• Licensed persons and Class B Registered Persons must maintain a principal place of business in Bermuda.
• Class A Registered Persons must appoint a senior representative resident in Bermuda who maintains an office there and notifies the Authority of material changes.
• A prospective Class A Registered Person must demonstrate to the Authority that it has secured the requisite licence, authorisation or registration from a recognised regulator before operating; if that approval is not secured, it must notify the Authority immediately and apply to be licensed or registered as a Class B Registered Person if it wishes to continue.
• Investment providers are subject to ongoing reporting requirements, filing of statutory returns, and cooperation with prudential visits and on-site supervision.
• Auditors and accountants of investment providers must give the Authority written notice of certain facts or matters under sections 42 and 45 of the Act.

Applies to

Investment business licensees (standard licence), Investment business licensees (test licence, regulatory sandbox), Class A Registered Persons, Class B Registered Persons, Non-Registrable Persons, Investment funds, Auditors and accountants of investment providers