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Bahamas Regulator Issues New Securities Policies

by Amanda Banks, Lowtax.net, London
28 March, 2018

The Securities Commission of the Bahamas has published three new policies on its website clarifying its position on various aspects of securities laws and the Financial and Corporate Service Providers Act.

The policies address the regulatory capital calculation for firms managing and advising on securities; the Commission's approach to the downgrade of an unrestricted investment fund administrator license; and the Commission's expectations with regard to accessing current due diligence on its registrants and licensees.

With regard to the "Regulatory Capital Calculation for Firms Managing and Advising on Securities Policy," the Commission has taken the position that firms registered to advise on securities or to manage securities who do not hold client cash or other assets may apply receivables for retrocessions, fees, and commissions in the calculation of net regulatory capital. These receivables are often significant to the operations of such firms and do not necessarily increase the firm's risk profile. For eligible firms to use these receivables to calculate regulatory capital, however, the receivables must be discounted according to their age, pursuant to the policy.

The second policy, "Reclassification and Downgrade of an Unrestricted Investment Fund Administrator Licence" addresses the conditions that will trigger the issuance of a warning letter to Unrestricted Investment Fund Administrators (UIFAs) that are negligent in certain key responsibilities, and, subsequently, referral to the Commission's Enforcement Department for a regulatory hearing. As the policy's name indicates, such a hearing could result in the UIFA's license being reclassified to that of a "Restricted" investment fund administrator, which do not have the Commission's delegated authority to license investment funds.

The final of the three policies, the "Due Diligence Refresher Policy," sets out the Commission's approach to ensuring it has current due diligence documentation on registrants and licensees pursuant to the Securities Industry Act 2011, the Investment Funds Act 2003, and the Financial and Corporate Service Providers Act 2000. Pursuant to the policy, once advised, registrants and licensees will have six weeks to deliver required due diligence documents to the Commission, or else face administrative penalties of up to USD100 per day for 60 days, after which enforcement action will be taken. The policy establishes that registrants and licensees operating for more than five years will be required to refresh their due diligence documentation.


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