BERMUDA Law and Practice Contributed by: Steven Rees Davies, Kyle Masters, Charissa Ball and Alexandra Fox, Carey Olsen
However, individuals trading solely on a princi - pal basis (eg, proprietary traders) are likely to fall outside the scope of the definition of market makers under the DABA. A thorough examina - tion of agreements between these individuals and trading platforms or exchanges is essential to determine their classification in each case. 7.3 Regulatory Distinction Between Funds and Dealers Although the IBA and Investment Funds Act 2006 (IFA) specifically differentiate between funds and dealers of traditional investments, the DABA does not. Typically, an investment fund falls outside the scope of the DABA unless it engages in digital asset business activities. Also, an investment fund that has appointed an invest - ment manager that is licensed under the IBA or authorised by a recognised regulator is exempt - ed from needing to apply for a DABA licence, provided it gives prior notice to the BMA. Meanwhile, a licensed digital asset business entity is explicitly excluded from the definitions of an investment fund under the IFA. The BMA takes a strict approach in relation to investment funds that invest in digital assets. In this regard, care will need to be taken to con - sider the overall structure of the business and the rights, powers and obligations of partici - pants, as well as the overarching objective, in order to properly assess whether a business or other arrangement is captured under the Digital Asset Regimes. 7.4 Regulation of Programmers and Programming The activity of developing and creating trading algorithms and other electronic trading tools is not regulated. However, if the benefit or use of such services is offered directly to the pub -
lic as part of that business, such activities may be captured under the DABA and/or the IBA – depending on the asset type being traded.
8. Insurtech 8.1 Underwriting Processes
The underwriting process for traditional insur - ers is currently regulated by the Insurance Act. An insurer will be required to submit a detailed description of its underwriting strategy to the BMA. The underwriting process may be con - ducted by the insurer or outsourced with the pri - or approval of the BMA. Although not expressly provided for in the statute, it is typical for the BMA to require a proportionately similar process for innovative insurers. 8.2 Treatment of Different Types of Insurance There are various classes and types of (re)insur - ers and insurance intermediaries regulated under the Insurance Act – all of which will attract differ - ent regulatory treatment by the BMA. However, the lines of insurance business are only statuto - rily divided between general business and long- term business. There is also a robust captive industry, which is regulated differently under the Insurance Act, as well as the innovative classes of insurance and insurance intermediaries who operate within the insurtech sandbox. 9. Regtech 9.1 Regulation of Regtech Providers There are no legislative or regulatory provi - sions governing the design, provision or deliv - ery of regulatory technology. Persons who use the technology may be caught by any one of Bermuda’s regulatory regimes, including those
100 CHAMBERS.COM
Powered by FlippingBook