CMA launches international certification for the capital markets industry
Nairobi April 21, 2016… As part of its drive to enhance the positioning of Kenya as a premier investment destination, the Capital Markets Authority (CMA) has launched international certification standards for practitioners in the capital markets industry. The launch is the product of the signing of a Memorandum of Understanding (MOU) with the Chartered Institute for Securities & Investment (CISI) in September 2014.
Financial Sector Deepening Africa (FSD Africa) has provided funding for the development of the curriculum and examination for the International Introduction to Securities and Investment (Kenya) (IISI- K) certification to be awarded by CISI. This is part of a strategic partnership between FSD Africa and the CMA in which FSD Africa will invest £ 1.1 million in a technical assistance programme to strengthen the CMA’s institutional capacity and support the development of Kenya’s capital markets.
The curriculum for Stage One, IISI (Kenya), has already been developed. The first cohort of market candidates went through training and sat for the examination in November 2015. This included thirteen CMA staff members and eight officials from various training institutions in Kenya. The curriculum for Stage Two which will cover local conduct of business standards and market regulations, under the Kenyan regulatory framework, will be completed by June 2016.
Speaking during the launch event, the CMA Acting Chief Executive, Mr Paul Muthaura said: “The, certification programme will ensure that practitioners in the capital markets industry have the requisite skills and apply best practice as Kenya takes its position as the hub for the African capital markets. For Kenya to be competitive and attract international flow of funds client facing staff within capital market intermediaries need to adopt international certification standards to support the introduction of more diversified products in the market, as well as to ensure that engagement with investors is consistent and meets the highest possible professional and ethical standards. The introduction of certification standards, aimed at creating a highly skilled talent pool, is aligned to the Capital Market Master Plan, the ten-year blue print for the Kenyan capital markets industry, and the ambition of the country to become a regional and International Financial Centre.
Mr. Muthaura added that the adoption of CISI’s International Introduction to Securities and Investment (IISI) program, as an industry recognised certification standard for Kenya is underpinned by the intention to support its adoption within the wider East African Community (EAC) region, with the recognition that capital market players are increasingly operating across borders.
Julias Alego, Director of Professional Education, FSD Africa said: "We are delighted to provide assistance for this certification programme which is an important step for Kenya towards boosting the professionalism of its capital markets and enhancing its attractiveness as an investment destination in sub- Saharan Africa..’’
Mr. Kevin Moore Chartered MCSI, Director of Global Business Development of CISI said: “We are very pleased to work with CMA to enhance and promote professionalism and professional standards in the capital markets industry in Kenya.” He further added that CISI has already established a Computer Based Testing (CBT) Center at the ICEA building in Nairobi’s Kenyatta Avenue. The cost of registration and undertaking Stage One exams has also been set at a subsidized rate to support market uptake.
The Authority issued a circular to all market licensees on Monday November 9th, 2015 informing them of the market certification and competency standards to be adopted pursuant to Regulation (19)3 of the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations 2011.
Notes to Editors:
Chartered Institute for Securities & Investment
Based in the City of London CISI is the professional body of choice for practitioners within the securities and investment industry. With representative offices in financial centres including Dublin, Singapore, Dubai, Mumbai and Colombo CISI has a range of globally recognized qualifications and supports individuals through membership from the student level to individual charter status, the pinnacle of professionalism. It works to ensure that products and services are up to date, relevant, and that they meet the needs of the ever changing financial services industry. Every year, over 40,000 examinations are taken in more than 50 countries around the world by candidates who are employed by 92 percent of the world’s top banks.
Capital Markets Authority
The Capital Markets Authority was set up in 1989 as a statutory agency under the Capital Markets Act Cap 485A. It is charged with the prime responsibility of both regulating and developing an orderly, fair and efficient capital markets in Kenya with the view to promoting market integrity and investor confidence. The regulatory functions of the Authority as provided by the Act and the regulations include; Licensing and supervising all the capital market intermediaries; Ensuring compliance with the legal and regulatory framework by all market participants; Regulating public offers of securities, such as equities and bonds & the issuance of other capital market products such as collective investment schemes; Promoting market development through research on new products and services; Reviewing the legal framework to respond to market dynamics; Promoting investor education and public awareness; and Protecting investors’ interest.
FSD Africa www.fsdafrica.org is a non-profit company, funded by the UK’s Department for International Development, which promotes financial sector development across sub-Saharan Africa. It sees itself as a catalyst for change, working with partners to build financial markets that are robust, efficient and, above all, inclusive. It uses funding, research and technical expertise to identify market failures and strengthen the capacity of its partners to improve access to financial services and drive economic growth. It believes strong and responsive financial markets will be central to Africa’s emerging growth story and the prosperity of its people.
Top of Form
The Chairman and Board of Directors of the Capital Markets Authority
Chairmen, Board Members, Chief Executives and Industry Executives
Distinguished markets stakeholders
Ladies and Gentlemen:
Good evening to you all and thank you for gracing this brainstorming forum for industry stakeholders;
We have convened here on three main fronts. Firstly, this milestone event is a unique meeting of minds to dialogue
Secondly, we would like to celebrate with all of you who are the innovators of this industry that have created wealth and transformed the lives of Kenyan’s through enhanced access and improved service delivery.
Thirdly we are celebrating the Capital Markets Authority’s recognition as the most innovative regulator of capital markets in Africa, an award conferred by Africa Investor Pan African award series in New York recently;
As the Chair of the committee of the Board of the Authority responsible for stewardship on all technical and policy matters, and on behalf of my Chairman, present here this afternoon, I can confirm the Authority’s commitment to doing things differently but for the better. Innovation, while largely acclaimed in the ICT goes beyond digitization. I work in the banking sector and I can attest to the transformation that technology and innovation have brought to the ideas of financial inclusion and efficiency. The good news is that the entire economy stands to benefit from such aggressive competition within the financial markets which will eventually translate into greater efficiency in terms of service delivery and cost;
Ladies and gentlemen: We are honoured to note that recognition for efforts towards innovation is not new to the Authority. Barely a year ago, the Authority earned the Microsoft Global Dynamics Customer Excellence Awards 2014 for implementing its new ERP and Risk based Supervision System. This solution which is a mix of financial, customer relationship and supply chain management solutions has helped the Authority work more effectively by facilitate business process re-engineering aimed at enhancing efficiency and service delivery. However, my job this evening is to share with you the more recent true innovations that have been realized in our market.
In this regard, recently we have experienced the roll out Equity Linked Notes and Credit Linked Notes to broaden the fixed income market; the framework for real estate investment trusts catering for both traditional income REITs as well as the home grown Development REITS is a first of its kind in the globe. The Growth Enterprise Market Segment at the Nairobi Securities Exchange has attracted four new listings in under two years. The markets has seen the development of shariah-compliant asset classes under Collective Investment Schemes in addition to the Authority licensing two shariah-complaint Investment Banks. We of course continue to see innovative back office systems being introduced by market intermediaries such as fund managers, stockbrokers and investment to improve client access and reach.
Ladies and gentlemen: In order to maintain this momentum, the Authority is among the first jurisdiction in Africa to develop a principles-based approval framework, specifically designed to facilitate the coming to market of unregulated innovations. We have already granted a no-objection for a crowdfunding platform that plans to source funds from outside Kenya to finance local Small and Medium Enterprises, while we recently published a Policy Guidance Note to support the listing of Exchange Traded Funds and target to use the same tool to support the issue of other products such as Global Depository Receipts and Global Depository Notes;
Notwithstanding this, we remain conscious that the regulator is merely a facilitator. Without industry investing in research and innovation new products and services could not be brought to the market. Remember, as outlined in the CMMP, the main driver of innovation must be market participants themselves, identifying opportunities and developing new products and services to meet them. Our role is to support innovation, transparency and competition.
Before we go into a more celebratory mood later this evening, and as we hear from the upcoming panel on opportunities for increased innovation, we wish to encourage you all to proactively engage one another and us as the regulator on additional products and services that will continue to deepen the capital markets in Kenya.
Ladies and gentlemen: As I conclude, I would like to reassure industry stakeholders that the Authority will continue support new ideas and thinking so as to develop our markets to even greater heights. By so doing, we will be inching closer to realizing the key role of the capital markets in mobilizing long term funding to support critical development projects in Kenya as espoused in the Vision 2030 Economic Blue Print.
I would also like to thank you all again for all your support. I must also recognize our development partners who have been very key in extending technical assistance to support new ideas, the Kenya Government and other policy makers that have facilitated an enabling policy and institutional environment.
Ladies and gentlemen: today is about bonding………..it is about celebrating, but also about boldly raising issues that will help in developing our market further. In a few hours we will be joining hands with fellow Kenyans in remembering Mashujaas, who just like you, have played a big role in improving the lives of Kenya.
It is now my pleasure to declare the stakeholders’ round table officially open and to hand over to Paul Muthaura and the esteemed panelists to challenge our minds.
I wish you all most fruitful deliberations.
Nairobi October 13, 2015…The Capital Markets Authority grants approvals based on the information made available at the time of consideration and subject to the undertakings from the Directors of the Issuer and their Professional Advisors that the disclosures in the Information Memorandum are complete, provide all the information that investors require to make an informed decision and are not misleading.
Where information arises following the grant of such approval, the Authority is vested with powers to take appropriate action and to give such directions as it deems fit in the public interest and to protect investor interests.
The Authority will work with the Kenya Deposit Insurance Corporation, the directors of Imperial Bank and the Central Bank of Kenya to identify the most appropriate resolution options with respect to the Corporate Bond issued by Imperial Bank in the interests of investors and other relevant stakeholders.
The Bond will in the interim remain unlisted at the Nairobi Securities Exchange until further notice.
Principal Secretary to the National Treasury,
Chairman and Board of the Capital Markets Authority;
Capital Markets leaders and stakeholders,
Distinguished Invited Guests
Ladies and Gentlemen:
It is my pleasure to join you this evening to preside over this important occasion of celebrating a shared achievement as stakeholders in capital markets. Taking into account that Kenya is neither the largest economy on the continent, nor the one with the most developed capital markets, it is particularly rewarding to have our capital markets regulator, and by extension our industry as a whole, recognized as being the most innovative on the continent.
Ladies and Gentlemen, allow me at this time to congratulate the Board and management of the Capital Markets Authority for this exemplary achievement. Having worked closely with the Authority, I am quite aware of the dedication and work that has gone into this achievement. I wish to encourage you to continue with that spirit of hard work and selflessness.
I recognize that this achievement was as a result of the collaborative efforts between the Authority and the capital markets stakeholders. In this regard, I join the Authority in thanking all stakeholders for the support you have continued to provide the Authority as it walks along this challenging road of creating a conducive environment for capital markets growth. I am informed that you have just had very fruitful brainstorming session and I am confident that the outcomes of that sessionwill inform critical interventions that are required to maintain positive growth of our markets.
As you continue striving to upscale our capital markets, you can rest assured of the National Treasury’s support and facilitation. Allow me to once again recognize this sector for the development of a 10 year Master Plan which I gladly launched last year and note has stimulated a great deal of positive development.
The development of Capital Markets Master plan came at a time when the Government was launching the second Medium Term Plan for implementing the Vision 2030. Implementation of the Plan was further bolstered early this year when I gazetted the Capital Markets Master Plan National Steering Committee to oversee the implementation of the Master Plan. As the National Steering Committee, we shall be holding our inaugural meeting towards the end of this month to receive a substantive progress report and identify and address critical issues that are pertinent to the implementation of the Master Plan.
Ladies and Gentlemen, we all know that one of our key objectives is to make Nairobi an International Financial Centre (IFC). Recognition of Kenya’s capital markets regulator is a major boost to this aspiration. The National Treasury will ensure that the Nairobi IFC Authority leverages on this key achievement by the Capital Markets Authority. Our ultimate goal is to make Nairobi the financial hub of the region. Experience from other International Financial centers indicates that capital markets plays a very critical role in defining an international financial Centre. In this regard the National Treasury will continue working together with CMA to ensure improved ranking of our Exchanges as well as increase in available products in our markets. In this regard, I am very pleased to hear that Kenya has now moved to the next level of market maturity with the introduction of a licensed Derivatives Exchange to be run by the Nairobi Securities Exchange.
The National Treasury supported the demutualization of the Nairobi Securities Exchange and can see that reform in governance and operations is clearly bearing fruit. Allow me to congratulate the Nairobi Securities Exchange for the positive step they made in reducing the admission fee tenfold. I urge them to continue reducing these markets costs so that we can have as many players in our market as possible. In order to support greater vibrancy in market activity, during this year’s Budget speech, I removed foreign ownership limits for listed companies as a way attracting and encouraging foreign investment and promoting greater liquidity for domestic investors.
Ladies and Gentlemen, while appreciating the role of CMA in making Nairobi an International financial Centre, please remember the scale of the challenge in front of you as a sector. I urge you all to continuously remember the role capital markets play in the overall growth of an economy by way of resource mobilization. As we strive to maintain our annual growth level of 10% with high savings levels, the capital markets have the cardinal role of facilitating mobilization and allocation of long term savings and investments. The National Treasury will therefore continue supporting the sector through engagement with other arms of the government in ensuring the right legal and regulatory framework and environment exists within the capital markets space.
Ladies and Gentlemen, I would like to assure those present that in line with our Vision 2030 objectives, the Government will continue to critically assess the balance between external debt and the domestic debt markets to finance national development projects. Where possible we will seek to finance government programs using domestic debt which is often cheaper than foreign debt in the long term. This is however only viable in an environment where the domestic debt market is vibrant and liquid. It is for this reason that we as National Treasury support all initiatives aimed at developing both government and corporate bond issues since an increased supply of instruments translates to competition and overall efficiency in the market.
You may be aware that I officiated the launch of the M-Akiba product 2 weeks ago. This savings vehicle which targets the retail investor is expected to not only mobilize government funding from the retail investors but will also help in lowering the borrowing costs of government debt in the medium to long term while supporting financial inclusion and the effective allocation of national savings.
One of the National Treasury’s objectives in managing its debt as well as generally boosting inward savings is to support any measure that aims at attracting the attention of the Kenyans in the diaspora. You may be aware that the Ministry of Foreign Affairs spearheaded the development of National Diaspora Policy that was launched early in January this year. The National Treasury will work together the Ministry of Foreign and other stakeholders to ensure that we maximize on diaspora remittances.
Ladies and Gentlemen, as we focus on tapping the diaspora remittances, we should not lose sight of maximizing the potential funding that can be mobilized from the gulf region and our brothers and sisters who profess the Muslim faith. In this context I have previously hinted that the government will be exploring issuing a Sukuk and I look forward to a number of Islamic financial markets conferences and projects that will be commencing in this and the next quarter. We appreciate that most of the traditional capital markets products do not meet the Shariah standards. I therefore glad to note that Capital Markets Authority, in conjunction with all the financial sector regulators, is already working on various initiatives to develop institutionalize competitive Shariah compliant financial markets in Kenya. At the National Treasury, we shall work with various national leaders to establish a National Shariah Supervisory Council that can be used to set standards and good practices for shariah compliant products in the country.
As I conclude, I wish to observe that with all our efforts on product development and innovation without good corporate governance, we shall not attract investors into the capital markets. My office will therefore continue working with the Authority to ensure that there is a robust corporate governance regulatory framework in place that can bring our integrity to international standards.
Finally, allow me to once again congratulate the Board and Staff of the Capital Markets Authority for this Innovation Award and commend the industry as a whole for driving progressive growth.
I wish you all fruitful engagements during this cocktail.