Cayman Islands Steps Up Financial Institution Security Measures to Ensure Investor Confidence
The Cayman Islands Monetary Authority (CIMA) has strengthened its commitment to ensuring the security of financial institutions in the country, aimed at boosting investor confidence and maintaining the island’s reputation as a leading financial hub.
Background on Securities Investment Business Act (SIBA)
Under the SIBA, securities are defined as:
- Shares
- Debentures
- Loan stock
- Bonds
- Certificates of deposit
- Warrants
- Options
- Futures
- Rights under contracts for differences
The act provides for the regulation of persons carrying on securities investment business, including:
- Market makers
- Broker-dealers
- Securities arrangers
- Advisors
- Managers
CIMA’s Role in Regulating Financial Institutions
CIMA is responsible for:
- Licensing financial institutions
- Supervising and enforcing licensees
- Investigating individuals or entities suspected of engaging in unlicensed securities activities
The authority’s powers and duties are outlined in sections 16 and 17 of the SIBA.
Securities Supervision Division
The Securities Supervision Division handles:
- Processing licence applications
- Ongoing supervision of securities investment business licensees
To determine whether a person is engaged in licensable activity, CIMA considers the definition of “securities” in Schedule 1 of the SIBA.
International Supervisory Standards and Recognized Overseas Regulatory Authorities
CIMA regulates securities investment business in accordance with:
- The SIBA
- Its regulations
- Relevant rules
- Guidance
- Policies
- Procedures issued by CIMA itself
- International supervisory standards
The authority also specifies overseas regulatory authorities and stock exchanges that are “recognised” for the purposes of the SIBA.
Recognized Overseas Regulatory Authorities and Approved/Recognised Stock Exchanges
CIMA requires the authority to specify:
- Overseas regulatory authorities recognized under CIMA’s Regulatory Policy for Approved Stock Exchanges
- Stock exchanges recognized under the same policy
The criteria used by CIMA in determining whether a stock exchange is “recognised” are set out in CIMA’s Regulatory Policy for Approved Stock Exchanges.
Boosting Investor Confidence and Maintaining Financial Hub Status
The Cayman Islands has taken significant steps to enhance financial institution security measures, setting out strict standards for securities investment business. This move is expected to boost investor confidence in the country’s financial institutions and maintain its position as a leading financial hub.
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