Apply for a licence

Investment Firms

FAQs

The purpose of this page is to make sure that the application process is fully understood.

This section sets out:

  • What is an Investment Firm?
  • What would this Licence allow you to do?
  • Capital Requirements
  • What do you need to submit?

Investment Firms

Most investment activity is regulated under the Financial Services (Markets in Financial Instruments) Act (‘MiFI Act’). There are three main types of firms covered in the MiFI Act.

  • Category 1 - Firms are permitted to deal as principal, agent and arrange deals for investors, give investment advice and hold/control customer money and assets.
  • Category 2 - Firms are permitted to deal as agent and arrange deals for investors, give investment advice and hold/control customer money and assets.
  • Category 3 - Firms are only permitted to arrange deals for investors and give investment advice.

The MiFI Act is designed to protect investors and safeguard market integrity by establishing a set of harmonised requirements governing the activities of authorised firms and to promote fair, transparent, efficient and integrated financial markets.

The requirements under the MiFI Act (and underlying regulations) are relatively extensive and cover compliance arrangements, internal systems and controls, outsourcing, record-keeping, conflicts of interest and the safeguarding of client assets or money held by firms.

Investment firms, authorised in Gibraltar, are also required to be members of the Investor Compensation Scheme. Further information can be found on the Gibraltar Investor Compensation Scheme website at www.gics.gi.

What would this Licence allow you to do?

The licence issued will specify the category assigned and will set out, within a 'permitted business schedule' the scope of services and instruments that the firm is allowed to carry on business in, from the list below.

Investment services and activities – core services

  1. Reception and transmission of orders in relation to one or more financial instruments
  2. Execution of orders on behalf of clients
  3. Dealing on own account
  4. Portfolio management
  5. Investment advice
  6. Underwriting of financial instruments or placing of financial instruments on a firm commitment basis
  7. Placing of financial instruments without a firm commitment basis
  8. Operation of Multilateral Trading Facilities.

Ancillary services – non-core services

  1. Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management
  2. Granting credits or loans to an investor to allow him to carry out a transaction in one more financial instruments, where the firm granting the credit or loan is involved in the transaction
  3. Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings
  4. Foreign exchange services where these are connected to provision of investment services
  5. Investment advice
  6. Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments
  7. Services related to underwriting.

Financial Instruments

  1. Transferable securities
  2. Money-market instruments
  3. Units in collective investment undertakings
  4. Options, futures, swaps, forward rate agreements and other derivative contracts relating to securities, currencies, interest rates or yields, or other derivatives instruments, financial indices or financial measures which may be settled physically or in cash
  5. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to commodities that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event)
  6. Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled provided that they are traded on a regulated market and/or an MTF
  7. Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be physically settled not being for commercial purposes, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and settled through recognised clearing houses or are subject to regular margin calls
  8. Derivative instruments for the transfer of credit risk
  9. Financial contracts for differences
  10. Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates, emission allowances or inflation rates or other official economic statistic that must be settled in cash or may be settled in cash at the option of one of the parties (otherwise than by reason of a default or other termination event), as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not mentioned previously, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market or an MTF, are cleared and settled through recognised clearing houses or are subject to regular margin calls.

There is a small range of investment activity that is not regulated under the MiFI Act but which may fall to be regulated under a separate piece of legislation – the Financial Services (Investment and Fiduciary Services) Act (IFS Act). This primarily relates to investment activity where the instrument concerned is not a financial instrument designated within the MiFI Act.

You should note that firms licensed under the IFS Act cannot passport their services

Other

Under the MiFI Act a firm is also able to request authorisation to act as a Multilateral trading facility (MTF) and a Regulated Market.

A MTF means a multilateral system operated by an investment firm or a market operator, which brings together multiple third party buying and selling interests in financial instruments in a way that results in a contract in accordance with the provisions of Part II of the MiFI Act.

A Regulated Market means a multilateral system operated or managed by a market operator, which brings together or facilitates the bringing together of multiple third party buying and selling interests in financial instruments in a way that results in a contract in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorised and functions regularly and in accordance with the provisions of Part III of the MiFI Act.

If you are interested in applying for an authorisation to act as a MTF or a Regulated Market, please contact the Authorisation team for further information.

Capital Requirements

The minimum initial and ongoing capital requirements under the MiFI Act are:

Category 1 Category 2 Category 3
€ 730,000 € 125,000 € 50,000

Firms who obtain a licence under the IFS Act to carry on an activity with respect to investments are required to hold a minimum initial and ongoing capital of £10,000.

Firms holding multiple licences may be required to hold the aggregate of the capital required for each licence prior to being permitted to conduct the proposed activity, and on an ongoing basis. The level of capital in these cases will be considered by the GFSC on a case by case basis. It is advised that you discuss this with the GFSC ahead of your application.

What do you need to submit?

An application pack is required to be submitted with all the relevant documents.

An application will not be considered complete if there are any outstanding documents.

The application pack must consist of:

  • Application Form
  • Business Plan
  • Financial projections for the next 3 years
    • Profit and loss account
    • Balance sheet
    • Returns for the next 3 years:
      • These need to cover four quarters of the first year and then annually for the following 2 years;
      • Returns should be submitted under the standardised reporting framework established by the European Banking Authority, COREP. If the firm wishes to be exempt from the standardised reporting framework under Article 95(2) of the EU Capital Requirements Regulations (No. 575/2013) it should request such exemption for GFSC approval.
  • Individual Questionnaire (for each individual holding a notifiable position)
  • Body Corporate Questionnaire (for each entity holding a notifiable position)
  • Trust Questionnaire (if applicable)
  • Internal Capital Adequacy Assessment document (ICAAP)
  • Recovery Plan (required for Category 1 firms only) (For more information on this please click here)
  • Mapping assessment of how the application meets the relevant legislative threshold requirements (i.e. statutory/regulatory criteria for licensing under relevant Act/s)

Any other document the applicant considers the GFSC should take into consideration as part of the application.

Business Plan

The business plan should clearly and comprehensively set out:

  • What services the firm intends to carry out and how it proposes to conduct the activity
  • Board structure and terms of reference, including details of any sub-committees set up by the Board to assist them carry out their duties
  • The firm’s risk management function
  • An assessment of the main risks facing the firm and how these are to be mitigated
  • The resources that are to be made available and the systems that the applicant intends to employ
  • Target market
  • How clients will be sourced
  • How records will be maintained
  • How, and by whom, any significant decisions will be made
  • Structure charts outlining both in-house and outsourced operations
  • Details of its compliance with the Anti-Money Laundering requirements
  • Details of outsourcing arrangements and how the firm will monitor and oversee these, including the controls implemented by the firm on these arrangements
  • If the applicant forms part of a larger group, details should also be provided of the activities of the group and a description of its structure.

The GFSC will be seeking evidence that the firm has considered the risk, compliance and operational issues associated with the proposed activities, as well as evidence that these have been documented and implemented.

Applicants should ensure that the business plan is coherent with the firm’s risk appetite and capacity.

Application Forms

Should you get an error when opening any of the forms, please check the FAQ tab for guidance on how to override this.

 

Application Form

Documents referred to in the application form must be clearly referenced to help us process the application swiftly.

 

RGP Vetting Form

Please note that an 'Individual Questionnaire' or a 'Notifiable Document' MUST be accompanied by a Royal Gibraltar Police vetting application form. 

(i) The enquiry form must be completed by the applicant in full with BLUE INK on an original form (scanned copies will not be accepted by the RGP)

(ii) £10 will be required to be submitted with the form

  Individual Questionnaire
  Body Corporate Questionnaire
  Trust Questionnaire

Where a trust is proposed as part of the shareholding structure of an applicant, the GFSC will need sight of a comprehensive explanation setting out the rationale for the use of such a vehicle within the structure.

 

Furthermore, the following is required to be submitted together with the Questionnaire

 

  1. Copy of the trust deed
  2. A written undertaking from the respective trustees to the effect that:
    • the provisions of the trust(s) in respect of beneficiaries, trustee(s) and terms of settlement are as contained in the relevant deed(s) dated [xxx],
    • the resignation of any trustee and, where appropriate, protector will be notified to the Commission forthwith,
    • no other trustee(s) or any additional or different protector(s) will be appointed, without the prior approval in writing of the Commission,
    • any proposed changes to the beneficiaries must be notified in writing to the Commission,
    • any proposed distribution or transfer for value or otherwise of any of the trust assets related to the applicant firm must receive the prior approval in writing of the Commission.
  3. Confirmation from the trustee(s) that they understand that failure to adhere to their undertaking may result in regulatory action against the applicant/regulated firm.

In addition to the Trust Questionnaire and the above listed information, the Applicant is also required to submit Individual Questionnaires for the settlor(s) and any named beneficiaries. This will not apply in cases where the beneficiary is a minor. In these cases, details of the individual will suffice i.e. name, DOB, address, nationality & passport number. When the trust is for example a discretionary family trust where not all beneficiaries are named (i.e. refers to spouse and children/issue of Mr X but does not actually name these individuals) a copy of the ‘letter of wishes’ of the Settlor, if any, will also be required.

In principle, the GFSC does not favour the use of nominee shareholdings for the purposes of holding shares, directly or indirectly, in a regulated firm. The Commission will therefore require that the applicant submit a paper setting out the rationale for the use of these structures in each instance where this is being proposed. This should include comprehensive details as to why it is necessary to hold the shares in this way.

Returns

  Investment Firm Supervisory Return

 

  Notes For Completion of the Investment Firm Supervisory Return

 

Authorisation Fees

Application Fee

The application fee must accompany your application. Please note, if you are applying for more than one licence, aggregate fees will apply.

Type Nature of Application Application Fee
Category 1 Application to be licensed £13,000
Category 2 Application to be licensed £10,000
Category 3 Application to be licensed £7,000
Categories 1, 2 and 3 Application to extend permitted activities £3,000

Annual Fee

The annual fee is not payable until your application is approved. For details of these please refer to the current Fee Regulations.

Under the GFSC’s annual fee methodology you pay a minimum base fee which is dependent on the set fee block assigned to your regulated sector. In addition to the base fee, you are also required to pay an additional amount that will be calculated based upon a range of factors including activity and income. To calculate the additional part of your annual fee the GFSC will need to review audited financial data and/or supervisory returns. At licensing stage, you will not yet have the requisite audited financial data or supervisory returns available for the GFSC to calculate the additional part of your annual fee. On this basis, the GFSC will only require you to pay the base fee at this stage and, towards the end of the GFSC’s financial year end (31 March), you will then be invoiced for the remainder of the annual fee which will be calculated based upon the financial data and/or supervisory returns provided by you up until that date.

Details on the payment methods can be requested from the Accounts team.

Service Level Standards

The current service level standards for Category 1 firms are:

  • To provide initial feedback to an application within 9 weeks of a complete application being received.
  • Once all of the information has been received from an applicant and the application is therefore considered to be complete, we aim to provide an in principle decision within 9 weeks.

The current service level standards for Category 2 and 3 firms are:

  • To provide initial feedback to an application within 5 weeks of a complete application being received.
  • Once all of the information has been received from an applicant and the application is therefore considered to be complete, we aim to provide an in principle decision within 4 weeks.

Please be advised that the above service level standards refer to the period of time in which the GFSC holds applications for consideration. Where we require further information or documents from an applicant the service level standards will be suspended until we receive the requested information. The period of time an application is pending because of factors outside the control of the GFSC will not be accounted for under the service level standards.

Please note that should we be unlikely to meet our SLS’s, we will advise you as soon as possible.

The purpose of this page is to set out:

  • What is an extension?
  • What do you need to submit?
  • Guidance

What is an extension?

Firms or individuals that are already licensed by the GFSC may apply to extend their authorisation/licence to provide additional financial or professional services.

If you are seeking a licence, authorisation or registration under a separate Act, please contact the Authorisation team so that we can determine what documents you are required to submit.

What do you need to submit?

An application pack is required to be submitted with all the relevant documents.

An application will not be considered complete if there are any outstanding documents.

The application pack must consist of:

  • Application Fee (if applicable)
  • Revised Business Plan
  • Financial projections for the the next 3 years, clearly identifying the impact of the additional business
    • Profit and loss account
    • Balance sheet
    • Returns (these need to be on a quarterly basis for the first year and then annually for the following 2 years)
  • Individual Questionnaires (for any new individual holding a notifiable position)
  • Body Corporate Questionnaires (for any new entity within the structure)
  • Trust Questionnaire (if applicable)

Any other document the applicant considers the GFSC should take into consideration as part of the application.

Guidance

The licensee should consider and provide information on the following:

  • What new licence/authorisation it requires
  • The type of new business/activity
  • Where the business will be sourced
  • Resources to deal with the additional business
  • The impact of the additional business on its capital requirements
  • What changes are being effected to its systems and controls.