Obtaining a securities broker licence in the Cayman Islands should be done in order to launch a regulated structure that works with investment instruments from this jurisdiction. The functions of supervising such organisations are performed by the Cayman Islands Monetary Authority (CIMA). Obtaining a licence of an intermediary in securities operations in the Cayman Islands makes it possible to support transactions with shares, bonds, investment funds and certain derivative instruments. The permit is used by international brokers, structures with client trading, investment groups and platforms for access to capital markets. The basis for arranging a Cayman permit of an operator of brokerage services on the stock market is SIBA — the Securities Investment Business Act. It is precisely this that regulates brokerage activity in the islands.
Obtaining a Securities Broker Licence in the Cayman Islands: What the Securities Broker Status Provides
Obtaining an investment broker licence in the Cayman Islands makes it possible to lawfully conduct securities operations on behalf of clients or within the limits of one's own activity permitted by CIMA. For the brokerage model, the conduct of securities operations in an agency capacity on behalf of clients is of key significance. This includes purchase, sale, placement and underwriting on the instructions of the client.
Obtaining a brokerage licence for transactions with securities in the Cayman Islands is suitable for:
client trading;
the execution of investors' orders;
operations with shares and bonds;
access to international stock markets;
the support of institutional clients;
brokerage infrastructure within an international group.
A securities broker licence in the Cayman Islands may be obtained by:
international brokerage companies;
structures with client trading;
platforms for access to stock markets;
brokers attached to investment funds;
family offices — when working with external clients;
structures for institutional investors;
groups with centralised execution of transactions.
Not all market participants obtain a full-fledged permit. Some categories operate as a registered person. Usually such a regime is used by structures that fall under separate exceptions of the law.
Obtaining an Investment Broker Licence in the Cayman Islands: the Main Requirements for the Applicant
When arranging a securities broker licence in the Cayman Islands, the regulator analyses the business reputation, the origin of the funds, the internal organisation of the business and the company's readiness to fulfil the requirements of financial supervision.
The permit is issued only to organisations. A private individual cannot act as the applicant. The following may fall under the SIBA regime:
a company;
a general and a limited partnership;
a foreign organisation;
a company or partnership with limited liability.
The main condition for obtaining an investment broker licence in the Cayman Islands is the conduct of regulated activity in accordance with SIBA.
Directors, the Managing Composition and Beneficiaries
In order to obtain a licence of an intermediary in working with securities in the Cayman Islands, it is necessary to confirm:
the business reputation of the owners;
the professional experience of the management;
the transparency of ownership;
the absence of sanctions and criminal risks;
the source of origin of the capital;
the qualifications of the persons responsible for operations and internal control.
The Organisation of the Activity
To arrange an investment broker permit in the Cayman Islands, it is not enough to register a company and obtain an address in the islands. The regulator assesses the operational model of the business:
who accepts client orders;
where record-keeping is conducted;
how the storage of information is organised;
who is responsible for internal control;
in what manner clients are checked;
where the servers and IT infrastructure are located;
which functions are transferred to external contractors.
If a substantial part of the operations is transferred to third parties, the regulator usually requires a detailed description of the outsourcing.
The Minimum Financial Resources and Insurance
CIMA establishes a basic requirement for financial resources for obtaining a securities broker licence in the Cayman Islands in the amount of 100,000 KYD, which constitutes approximately 122,000 USD. Before submitting the documents to the regulator, it is important to show that the company is able to support the operational expenses, the internal
After obtaining a licence of an intermediary in securities operations in the Cayman Islands, the structure must maintain insurance coverage for:
professional risks;
the protection of the managing composition;
the activity of the corporate secretary;
losses in the event of a stoppage of work.
The minimum limit for professional risks is no lower than 1 million KYD (about 1.2 million USD) per insured event. The aggregate limit is no lower than 1.5 million KYD (approximately 1.8 million USD).
How to Obtain a Securities Broker Licence in the Cayman Islands: the Registration Route
Obtaining a Cayman securities broker permit takes place through CIMA's electronic system and includes several consecutive stages:
It is determined whether the project for creating a brokerage organisation falls within SIBA. The securities operations, the procedure for executing transactions, the categories of clients and the company's scheme of work are analysed.
A company is created in the Cayman Islands or a foreign structure is prepared for work under the SIBA regime. The constituent documentation is prepared, directors are appointed, shares are issued and a registered office is arranged.
Before submitting the documents, the directors, senior officers, the internal control specialist, the AML officer and their deputy, as well as the person responsible for financial reporting, are determined.
A description is developed of the company's activity, the categories of clients, the sources of income, the insurance risks, the structure of settlements, the IT infrastructure, the procedure for storing data and the scheme of work with client assets. Additionally, AML/CFT policies are prepared.
For submitting the documents to register an investment broker licence in the Cayman Islands, CIMA's electronic portal is used. The applicant sends a request for connection to the system by email. After confirmation, access to the electronic forms is created.
A request form is sent to CIMA together with the appendices, information about the owners, internal documents and confirmation of the financial resources. At this stage, the registration fee is paid.
The regulator analyses the structure of the business, the origin of the capital, the professional experience of the management, the internal procedures, the insurance coverage and the system of controlling clients. If necessary, CIMA requests additional information or a legal opinion on the need to arrange a securities broker permit in the Cayman Islands.
CIMA may issue the permit, establish additional conditions or refuse to grant the request. The decision depends on the transparency of ownership, the quality of the internal organisation and the completeness of the information provided.
After approval, the fee for the first issuance of the licence is paid. After payment, the company obtains the right to conduct only those operations that are indicated in CIMA's permit.
Conclusion
Obtaining a securities broker licence in the Cayman Islands requires the precise qualification of the activity, a transparent ownership structure and a full-fledged system of internal control. Our team supports the project from the choice of the SIBA category to the obtaining of a ready permit for launching international brokerage activity.
Is insurance required?
Yes. After obtaining a licence for securities operations in the Cayman Islands, the broker must have insurance of professional risks, the protection of managers and the risk of a suspension of work. The minimum coverage for professional liability is about 1,219,000 USD per insured event.
Is it possible to cover brokerage activity, investment advice and portfolio management with one licence?
Yes, if CIMA includes these areas when arranging the permit of an intermediary in securities operations in the Cayman Islands. The law separates activity with investment instruments, the arrangement of transactions, portfolio management, advice and other regulated services. Therefore, the business model needs to be determined before submitting the application.
Is it necessary to obtain a work visa after arranging a securities brokerage company licence in the Cayman Islands?
Not always. If the owner only holds an interest in the structure and does not work in the islands, a separate immigration status may not be required. If they relocate and participate in the management or the current work, a work permit or another suitable document is usually required.