securities investment business

Who is caught

The Securities Investment Business Law (2020 Revision) is the principal statute governing persons carrying on securities investment business in or from the Cayman Islands. Whether a person is caught turns on whether their activity falls within the definition of securities investment business (Schedule 2) in relation to a security, and whether an exclusion or exemption applies. The regime is administered by the Cayman Islands Monetary Authority (CIMA).

Persons caught

• Licensees: Persons who must hold a CIMA licence to carry on securities investment business.
• Registered persons: Persons falling within Schedule 4 who register with CIMA rather than hold a full licence.
• Market participants: Broker members of the Cayman Islands Stock Exchange, market makers, and EU Connected Managers, EU Connected Funds and their depositaries are within scope of the Law.
• Licence categories: The Securities Investment Business (Amendment and Validation) Act, 2024 (in force 1 January 2025 per SL 58 of 2024) requires applicants to specify a category: broker-dealer, market maker, securities advisor, securities arranger or securities manager, and whether the licence is restricted.

What is a security

The Amendment (No.2) Law, 2020 broadened the definition of partnership and Schedule 1 so that interests in a Cayman limited liability partnership and in foreign LLPs are treated as securities, meaning dealing in, arranging deals in, managing or advising on LLP interests can constitute securities investment business. The Amendment Act, 2023 extended offence liability to partnerships, exempted limited partnerships, limited liability partnerships and other unincorporated associations, and to partners and persons concerned in their management or control.

Connected directors regime

Under the Directors Registration and Licensing Law, 2014, natural and corporate directors of certain securities investment business companies caught by Schedule 4 of the Securities Investment Business Law (alongside regulated mutual funds) are themselves subject to CIMA registration or licensing. Law 7 of 2019 made a technical change to the cross-reference defining which entities are covered.

Sources: Directors Registration and Licensing (Amendment) Law, 2019 (Law 7 of 2019) · Directors Registration and Licensing Law, 2014 (Law 10 of 2014) · Securities Investment Business (Amendment and Validation) Act, 2024 (Act 21 of 2024) · Securities Investment Business (Amendment) (No.2) Law, 2020 · Securities Investment Business (Amendment) Act, 2023 (Act 6 of 2023) · Securities Investment Business Law (2020 Revision)

Key duties

The continuing obligations are spread across the Securities Investment Business Law and its subsidiary regulations, together with CIMA rules, statements of guidance and policies. The core duty is to be licensed or registered before carrying on securities investment business, followed by ongoing financial, conduct-of-business, filing and notification obligations.

Licensing and registration

• Licence or registration: Persons carrying on securities investment business (unless excluded or exempt) must hold a licence under section 5, or register under section 5(4) if within Schedule 4, of the Securities Investment Business Law.
• Application content: Licence applicants must submit the Schedule 1 particulars (company, ownership, management, references, financial and insurance information, compliance/AML personnel and a signed declaration by two senior officers) and pay the prescribed fees under the Licence Applications and Fees Regulations (2026 Revision).
• Registration fees: Under the Registration and Deregistration Regulations (2026 Revision), an applicant for registration pays a registration fee of six thousand dollars and a registered person pays an annual fee of six thousand dollars.
• Restricted licences: A restricted licence holder may serve no more than twenty clients, must not serve a client not already identified to CIMA until that client's particulars are submitted in writing, and cannot use a restricted licence for market maker or securities arranger activity.
• Director approval: Licensees must have directors approved by CIMA and comply with requirements on the number of directors; the May 2018 licensing policy states applicants must maintain at least two directors and obtain CIMA approval of changes in directors and senior officers.

Financial requirements and audit

• Financial resources: Under the Financial Requirements and Standards Regulations, 2003 a licensee must at all times hold financial resources in excess of its calculated financial resources requirement and maintain adequate risk management systems and accounting records.
• Reconciliations: Licensees must reconcile bank/building society and intermediary balances at least once every five weeks, and own margin accounts with intermediaries at least once every business day, correcting differences promptly.
• Periodic reporting: Broker-dealers must submit a monthly reporting statement and other licensees a quarterly statement within 15 business days of period end, plus an auditor's opinion on internal controls and an annual reconciliation with audited accounts.
• Annual audit: The May 2018 licensing policy notes the statutory duty (SIBL section 13) to have accounts audited annually and filed with CIMA within six months of financial year-end.

Conduct of business and client assets

• Client asset segregation: Under the Conduct of Business Regulations (2026 Revision), licensees must segregate client assets and money from their own, hold client money only with approved banks, and perform client account reconciliations at least every five weeks (collateral within 10 business days), correcting discrepancies and covering shortfalls.
• Insurance disclosure: Licensees must maintain professional indemnity, senior-officer liability and business-interruption insurance appropriate to their business and file current insurance details with CIMA prior to licence renewal, and must disclose that they are regulated by CIMA.
• Personal dealing and inducements: Licensees must obtain written undertakings on personal account dealing, require reporting of qualifying personal transactions within 2 business days, and maintain gifts/inducements and record-keeping procedures.
• Annual client reporting statement: A licensee dealing with or managing securities of a foreign fund must provide CIMA an annual client reporting statement with the fund's name, jurisdiction and, where applicable, listing exchange and overseas regulator.
• Client classification and suitability: Statements of guidance set out client classification (market counterparty, professional client, private client), suitability and risk-disclosure duties, dealing standards and periodic client statement requirements.

Governance, controls and notifications

• Corporate governance: The April 2023 Rule on Corporate Governance requires a documented framework, at least annual review, conflict declarations and notification to CIMA within ten days of any substantive issue that could materially affect the entity.
• Internal controls: The April 2023 Rule and Statement of Guidance on Internal Controls imposes rules on the governing body and adds securities-specific rules on conflicts, discretionary accounts, dealing controls and segregation of client funds.
• Structure and capital changes: Both the Financial Requirements Regulations and the reorganisation guidance require prior CIMA consent to changes to issued capital, sale or merger, and establishing/acquiring branches or subsidiaries, and reporting of acquiring 10 percent or more of another company's voting shares (disposal or dissolution of a subsidiary requires notice within seven days).
• Cessation and non-commencement: Licensees must give CIMA not less than 28 days' advance written notice before ceasing business, complete or transfer outstanding client business, and commence business within six months of licensing unless CIMA agrees otherwise.
• Deregistration: A registered person ceasing regulated activity must apply to deregister, ensuring fees are paid and filings are current, and provide the documents specified for the relevant pathway (general cessation, liquidation, merger or transfer).

EU Connected managers

The 2016 AIFMD-equivalent Regulations require EU Connected Managers to notify CIMA and provide business and fund-level information, maintain minimum capital as a Cayman Islands AIFM, notify capital breaches forthwith, notify changes within specified periods, and provide an annual compliance declaration within six months of financial year-end.

Sources: Securities Investment Business (Conduct of Business) Regulations (2026 Revision) · Securities Investment Business (EU Connected Fund (Alternative Investment Fund Managers Directive)) Regulations, 2016 · Securities Investment Business (Financial Requirements and Standards) Regulations, 2003 · Securities Investment Business (Licence Applications and Fees) Regulations (2026 Revision) · Securities Investment Business (Registration and Deregistration) Regulations (2026 Revision) · Securities Investment Business Law (2020 Revision) · Regulatory Policy – Licensing Securities Investment Business (May 2018) · Statement of Guidance - Cessation and Non-Commencement of Business (Securities Investment Business) · Statement of Guidance - Reorganisation of Structure and Variation of Capital (Securities Investment Business) · Rule on Corporate Governance for Regulated Entities (April 2023) · Statement of Guidance - Professional Indemnity Insurance (August 2016) · Rule and Statement of Guidance – Internal Controls for Regulated Entities (April 2023)

Exemptions and carve-outs

The Securities Investment Business Law provides for excluded activities and non-registrable persons, and the 2024 Act and CIMA policies add further carve-outs. Coverage of the precise content of some exclusions is limited because the consolidated Law text indexed here reproduces mainly front matter and schedules.

• Single family offices: Single family offices are treated as an excluded category under the Securities Investment Business Law.
• Excluded activities / non-registrable persons: Schedule 3 sets out excluded activities and Schedule 2A sets out non-registrable persons, carving certain persons out of scope.
• Repealed family exemption: SL 114 of 2020 repealed Schedule 4A (connected persons within a single family) and paragraph 2(d) of Schedule 2A, so persons who relied on those exemptions must reassess whether they now require registration or a licence.
• Virtual asset trading platforms: Under the 2024 Amendment and Validation Act, CIMA must exempt operators of virtual-asset-only trading platforms from licensing or registration, and may exempt other persons better supervised under, or already licensed under, the Virtual Asset (Service Providers) Act.
• Financial requirements waiver: CIMA may waive or modify the financial requirements for a licensee already subject to equivalent financial reporting obligations under another regulatory law (for example banking, insurance or mutual funds legislation).
• Approved stock exchange exemptions: CIMA's April 2023 Approved Stock Exchanges policy notes that listing on an approved exchange can trigger licensing, registration or share-transfer-approval exemptions under the Securities Investment Business Act, provided the exchange appears on CIMA's published list.
• Directors regime exemption: Under the Directors Registration and Licensing Law, 2014, persons connected to companies management licence holders, mutual fund administrators or overseas-regulated fund managers are exempt from the professional director licensing requirement but must still register.

Sources: Directors Registration and Licensing Law, 2014 (Law 10 of 2014) · Securities Investment Business (Amendment and Validation) Act, 2024 (Act 21 of 2024) · Securities Investment Business (Amendment of Schedule 2A and Repeal of Schedule 4A) Order, 2020 (SL 114 of 2020) · Securities Investment Business (Financial Requirements and Standards) Regulations, 2003 · Securities Investment Business Law (2020 Revision) · Regulatory Policy – Approved Stock Exchanges (April 2023)

Enforcement and penalties

Enforcement arises both under the Securities Investment Business Law itself and through CIMA's cross-sectoral administrative fines regime.

• Supervisory and enforcement powers: Under the Securities Investment Business Law, CIMA has powers including cease-and-desist directions, injunctions, restitution and disgorgement orders, entry and search of premises, and winding-up, and the Law creates offences relating to false or misleading markets and insider dealing.
• Extended criminal liability: The Amendment Act, 2023 extended personal criminal liability under section 37 to partners and persons concerned in the management or control of partnerships, exempted limited partnerships, LLPs and other unincorporated associations where an offence is committed with their consent, connivance or neglect.
• Administrative fines: Under the Monetary Authority Act and the Administrative Fines Regulations (2025 Revision), CIMA may impose fixed or discretionary fines on securities investment business licensees and registrants for breach of a prescribed provision listed in Schedule 1, classified as minor, serious or very serious, following a breach notice and reply process. The specific fine amounts for each class are not stated in the summaries provided.
• Fine process and appeals: A party receiving a breach notice for a fixed-fine breach may rectify within thirty days; fixed fines may be internally reviewed by CIMA's Management Committee and discretionary fines appealed to the Grand Court. An unpaid fine is a debt to the Crown and attracts interest.
• Directors regime offences: The Directors Registration and Licensing Law, 2014 creates criminal offences, with fines and/or imprisonment, for acting as a director without the required registration or licence.

Sources: Directors Registration and Licensing Law, 2014 (Law 10 of 2014) · Monetary Authority (Administrative Fines) Regulations (2025 Revision) · Monetary Authority Law (2020 Revision) · Securities Investment Business (Amendment) Act, 2023 (Act 6 of 2023) · Securities Investment Business Law (2020 Revision)