The Cayman Islands Securities Investment Business Act (2020 Revision)

29 Jan 2026

The Cayman Islands Securities Investment Business Act (SIBA) regulates securities investment business conducted in or from the Cayman Islands. Administered by the Cayman Islands Monetary Authority (CIMA), the Act aims to ensure that securities-related activities are carried out by fit and proper persons under stringent supervisory standards. It applies to entities incorporated or registered in the Cayman Islands, including foreign entities with a local business presence. The Act also aligns with international regulatory frameworks, such as anti-money laundering (AML) and counter-terrorism financing (CFT) measures.

Definition of Securities Investment Business

SIBA defines ‘securities investment business’ broadly, covering activities such as dealing in securities, arranging deals, managing securities, and providing investment advice. It also includes managing or marketing EU Connected Funds and acting as a depositary for such funds. ‘Securities’ are defined expansively to include shares, bonds, warrants, options, futures, and contracts for differences, among others.

Licensing and registration requirements

Entities engaging in securities investment business must either obtain a licence or register with CIMA unless exempted. Licensing applies to activities such as dealing, arranging, managing, or advising on securities. Persons who can register instead of becoming licensed include entities conducting business exclusively for sophisticated or high-net-worth individuals or within a corporate group.

The application process for both licensing and registration involves submitting detailed documentation, including business plans, organisational structures, and compliance measures.

Exemptions from licensing and registration

Certain activities are excluded from the scope of SIBA, such as issuing or redeeming one’s own securities, acting in fiduciary roles (eg trustee, liquidator), or conducting securities business as part of a joint enterprise. Non-registrable persons include those acting in incidental capacities or carrying out securities business exclusively for sophisticated or high-net-worth individuals.

Compliance obligations

Licenced and registered entities must adhere to strict compliance requirements, including:

Anti-money laundering (AML) and counter-terrorism financing (CFT) measures.
Corporate governance standards.
Annual audits and financial reporting.
Segregation of client and proprietary funds.

Entities must also notify CIMA of material changes within 21 days and maintain proper records.

Central to safeguarding investor interests and market fairness, the Securities Investment Business (Conduct of Business) Regulations, 2003, and amendments in 2020 introduced rigorous client engagement criteria, such as suitability assessments and disclosure requirements. By addressing business conduct, these regulations reinforce the fiduciary responsibilities of securities investment professionals, ensuring they act in clients’ best interests.

Enforcement and penalties

CIMA has extensive enforcement powers, including the ability to revoke licences, impose conditions, and take legal action. The Act criminalises insider trading and market manipulation, with penalties including fines of up to KYD 100,000 (USD $121,950) and imprisonment for up to seven years. CIMA can also apply for court orders to preserve assets or wind up non-compliant entities.

Insider trading and market manipulation

SIBA introduces specific offences for creating false or misleading markets and insider trading. These provisions aim to protect market integrity and investor confidence. Penalties for violations include significant fines and imprisonment.

Significant developments

Key amendments in 2019 replaced the long-standing and much adopted category of “excluded persons” and replaced it with “registered persons”, requiring re-registration by January 2020. The SIBA also introduced provisions for managing EU Connected Funds and aligned with international standards, including FATCA, CRS, and economic substance requirements.

In 2020, further amendments on governance were implemented under the Securities Investment Business (Amendment) Act, 2020 and the Securities Investment Business (Amendment) (No. 2) Act, 2020. These modifications focused on enhancing governance structures for licensees and registrants, primarily targeting the robustness of corporate ownership disclosures. Additional measures within the Amendment Act of 2023 continued this trajectory, emphasising transparency and operational accountability.

On prudential requirements, the Securities Investment Business (Financial Requirements and Standards) Regulations, 2003 set minimum capital and liquidity requirements for licensees, ensuring that firms maintain financial resilience to meet obligations. Complementing these regulations are the Securities Investment Business (Licence Applications and Fees) Regulations, 2003 and their subsequent amendments in 2024, which standardised licensing protocols and updated fee structures to reflect the evolving cost of regulatory oversight.

More recent developments include the Securities Investment Business (Registration and Deregistration) (Amendment) Regulations, 2024, reinforcing the mechanisms for maintaining accurate registries of active market participants. These updated processes enhance the Cayman Islands Monetary Authority’s (CIMA) ability to oversee market activities.

Implications for market participants

Entities must carefully assess their activities to determine licensing or registration requirements and maintain ongoing compliance with CIMA’s regulations relative to SIBA and its subsidiary legislation. SIBA’s robust enforcement mechanisms and compliance obligations underscore the importance of adhering to its provisions.

Further reading