Regulatory Policy – Approved Stock Exchanges (April 2023)

Summary

This is a Regulatory Policy issued by the Cayman Islands Monetary Authority (CIMA) in April 2023 setting out the criteria and process CIMA uses to determine which stock exchanges qualify as "approved," "recognised" or "specified" exchanges for purposes of several Cayman regulatory laws: the Mutual Funds Act, Private Funds Act, Securities Investment Business Act, Banks and Trust Companies Act, Insurance Act, Companies Management Act, and Virtual Asset (Service Providers) Act. Under those Acts, being listed or having shares publicly traded on an approved exchange can trigger licensing exemptions, registration exemptions, or exemptions from share-transfer approval requirements.

Automatic Qualification

• An exchange automatically qualifies as approved if it is a US licensed exchange.
• An exchange automatically qualifies as approved if it is an EU regulated exchange.
• An exchange automatically qualifies as approved if it is a Canadian licensed exchange.
• An exchange automatically qualifies as approved if it is a full member of the World Federation of Exchanges.
• An exchange automatically qualifies as approved if it is the Cayman Islands Stock Exchange.

Approval on Request

• Oversight standard: The requestor must demonstrate compliance with WFE market principles or IOSCO-consistent oversight.
• Home-country significance: The exchange must show significance in its home country.
• Cayman connection: The exchange must have sufficient business connection to the Cayman Islands.

CIMA may also refuse or withdraw approval where doing so is in the public interest, for example where an exchange is located in a sanctioned jurisdiction, and will publish additions, removals and refusals by notice in the Gazette and on its website. The document is primarily explanatory of CIMA's internal approval criteria and process rather than imposing new ongoing compliance obligations on licensees generally, though it does create specific requirements for any party seeking approval of a non-standard exchange, and it clarifies that regulated entities relying on exchange-listing exemptions must ensure the relevant exchange is on CIMA's approved list.

Key obligations

• A party requesting approval of a stock exchange that does not meet the automatic criteria (US licensed, EU regulated, Canadian licensed, WFE full member, or Cayman Islands Stock Exchange) must demonstrate that the exchange complies with WFE market principles or is subject to IOSCO-consistent enforceable obligations, is significant within its country of origin, and has sufficient business connection to the Cayman Islands or regulated entities
• Requestors seeking exchange approval must submit the request with all relevant supporting documents to CIMA for assessment
• Regulated entities relying on exemptions tied to a 'recognised' or 'approved' stock exchange (e.g., under the MFA, PFA, SIBA, BTCA, IA, CMA, or VASP Act) must ensure the exchange in question appears on CIMA's published list of approved stock exchanges

Applies to

mutual funds, private funds, mutual fund administrators, securities investment business licensees, banks, trust companies, insurance licensees, company management licensees, virtual asset service providers