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Nairobi cityscape - capital city of Kenya

CMA issues coffee broker license to Kirinyaga Slopes Coffee Brokerage Company Limited

Nairobi, 17 October 2023…As part of its efforts to deepen coffee sub-sector reforms, the Capital Markets Authority (CMA) has licensed Kirinyaga Slopes Coffee Brokerage Company Limited as a coffee broker. The company’s promoter is the Kirinyaga County Cooperative Union which comprises of 14 cooperative societies. This brings the number of licensed coffee brokers to 14.

The other licensed coffee brokers are; Meru County Coffee Marketing Agency Limited; Kipkelion Brokerage Company Limited; Murang’a County Coffee Dealers Limited; United Eastern Kenya Coffee Marketing Company Limited; Mt. Elgon Coffee Marketing Agency; Embu Coffee Farmers Marketing Agency Limited; Kinya Coffee Marketing Agency Limited; Alliance Berries Limited; Bungoma Union Marketing Agency Limited; New Kenya Planters Co-operative Union PLC (New KPCU); KCCE Marketing Agency Limited; Meru South Coffee Marketing Company Limited; and Baringo Kawa Brokerage Company Limited.

The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, observed, “the momentum of the reform agenda needs to be sustained to ensure full implementation of the Capital Markets (Coffee Exchange) Regulations. This is expected to ensure the marketing and trading mechanism at the Nairobi Coffee Exchange promotes fair trade, is transparent and enhances price discovery, ultimately benefitting the coffee farmers.’’

The Capital Markets Act was reviewed in 2016 to expressly provide CMA the mandate to regulate spot commodity markets including the coffee commodity market in Kenya. CMA regulates the structured spot commodity markets and in particular, the coffee commodity market according to Section 11(3) of the Capital Markets Act.

 

ENDS

BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

The Capital Markets Authority (CMA) 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. CMA also regulates the commodity markets and online forex trading. 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. For more information, please contact: Antony Mwangi, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

easra

East African Securities Regulators Call for Full Representation from All EAC Countries

Kampala, Uganda: The regional capital markets regulators, operating under the esteemed banner of the East African Securities Regulatory Authorities (EASRA), convened during their Consultative Committee meeting at the Royal Suites Bugolobi, Kampala, from the 11th to 13th of October 2023. This gathering marked the 52nd Consultative regional meeting represented by Uganda, Kenya, Rwanda, and Tanzania.

The consultative meeting, and the respective countries’ capital markets focused on a myriad of critical topics and initiatives aimed at strengthening EASRA. It emphasized the inclusion of more East African member states into the organization, with particular reference to the Democratic Republic of Congo (DRC) and South Sudan.

Notable attendees included Keith Kalyegira, CEO of Capital Markets Authority (CMA) Uganda; Wycliffe Shamiah, the CEO of CMA Kenya; CPA Nicodemus D. Mkama, CEO of Capital Markets and Securities Authority (CMSA) Tanzania; and CMA Rwanda, represented by Carine Twiringiyimana.

Subcommittees from various East African countries, comprising Market Development, Market Supervision, and Legal Affairs, engaged in extensive discussions on various pivotal subjects. These included regulatory sandboxes, ESG (Environmental, Social, and Governance), Private Equity & Venture Capital regulations, Crowdfunding, and Islamic financing, with a special emphasis on Small and Medium-sized Enterprise (SME) financing.

Keith Kalyegira, the current Chairman of EASRA, reinforced the collective ambition of EASRA, stating, “We will extend a formal invitation to DRC and South Sudan to join EASRA, solidifying regional and country roadmaps to further bolster East Africa’s capital markets industry.”

‘It was agreed that another EASRA Strategic Plan with a vision: to foster the development of an integrated East African capital market be developed. This is to be achieved through advocacy, innovation, capacity building, harmonisation of regulations and laws, and knowledge sharing, ultimately positioning the EAC capital market as a respected platform for mobilizing long-term capital for economic development. The Strategic Plan will also serve as a roadmap for EASRA members in the region,’ he added.

EASRA members noted the progress Burundi has made in the establishment of their capital markets.

Recognizing the significance of green finance, EASRA reaffirmed their commitment to adopting the ISSB (International Sustainability Standards Board) standards, S1 and S2. Wycliffe Shamiah, the CEO of CMA Kenya called upon EASRA members to collaborate with accounting professionals and standard setting bodies in the members’ respective countries to harmonize and promote these standards, concurrently embarking on conducting awareness and sensitization campaigns.

Emphasizing the critical role of SME financing in fostering market growth, EASRA members committed to the continual development and harmonization of the regulatory framework, thereby facilitating the expansion of capital markets across the East African Community (EAC), with particular emphasis on crowdfunding regulations.

The CEO of CMSA Tanzania highlighted the role of robust legal frameworks in supporting SMEs and the evident improvements in this sector. He also expressed the need for harmonized regulations in Islamic financing and crowdfunding, emphasizing the utilization of country-specific legal frameworks to address challenges conclusively.

CMA Rwanda highlighted the Collective Investment Schemes (CIS) legal framework which caters for CIS formations under different types such as; Partnerships, Companies, Trusts and contractual schemes provisions hence strengthening the available pool of savings for deploying into the economy.

The gathering underlined the necessity of cross-border information sharing to facilitate enforcement actions in line with the information sharing emphasized for members of the International Organization of Securities Commissions (IOSCO) multilateral memorandum of understanding (MMOU).

In closing, the Consultative Committee underscored the collective responsibility of EASRA members in the development of EAC Capital Markets, with a firm commitment to harmonize legal and regulatory frameworks in order to ease capital raising and investing across the region.

 

NOTES TO THE EDITOR

Capital Markets Authority (CMA)-Kenya, Capital Markets Authority (CMA)-Uganda and Capital Markets and Securities Authority (CMSA)-Tanzania entered into a Memorandum of Understanding (MoU) and adopted a common blue print on the integration of the East African Capital Markets in 1997. This MoU formed the basis for the establishment of the East African Securities Regulatory Authorities (EASRA). The Capital Markets Authority (CMA)-Rwanda later joined EASRA in 2009, and the Bank of the Republic of Burundi (BRB) in 2011.  EASRA continues to operate as a consultative institutional forum where the regulatory authorities discuss matters of mutual interest that affect their operations.

The main objectives of EASRA are Information sharing among the members; mutual assistance and cooperation between members; and advancing the integration of the East African capital markets. Under the memorandum signed by the regulators, EASRA is mandated to: Develop common capital market strategies; Harmonize capital market laws and structures; Foster regional capital markets development; Facilitate cross-border investments; Develop market infrastructure; Develop policy proposals for capital markets incentives; Develop proposals for the alleviation of impediments; and Develop a common/ similar trading system(s).

Nairobi cityscape - capital city of Kenya

CMA to participate in World Investor Week 2023

Nairobi 03 October 2023..…The Capital Markets Authority (CMA) has announced its participation in the World Investor Week (WIW) 2023 taking place from 2 to 8 October 2023 to enhance investor awareness and protection. During the week, CMA has organized an Islamic finance workshop, 4 to 5 October 2023, to deepen understanding of the opportunities and principles around Islamic finance products.
The seventh edition of the week-long WIW campaign is an initiative of the International Organization of Securities Commissions (IOSCO), the global standard setting body of capital markets regulators. The global outreach by capital markets regulators and related institutions seeks to raise awareness of the importance of investor education and protection and to highlight the various initiatives of securities regulators in these two critical areas.

The key messages of the WIW campaign in 2023 will focus on Investor Resilience, Crypto Assets and Sustainable Finance.  Other themes cover frauds and scams prevention, basics of investing, technology and digital finance.

During the WIW 2023, CMA is also running radio campaigns to enhance investor awareness of capital market products.

The CMA Chief Executive, Mr. Wyckliffe Shamiah observed, “the Authority has continued to implement robust awareness and investor protection strategies and will continue supporting the Government’s Bottom-up Economic Transformation Agenda (BETA) by positioning the capital markets as a source of long-term funding to support various projects and initiatives”.

ENDS

BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

The Capital Markets Authority (CMA) 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. For more information, please contact Capital Markets Authority, Manager Corporate Affairs and International Relations, Antony Mwangi on amwangi@cma.or.ke

Nairobi cityscape - capital city of Kenya

Capital Markets Authority Greenlights Kenya’s Inaugural Sukuk Bond

Nairobi, 20 September 2023… In a groundbreaking development for Kenya’s capital markets landscape,
the Capital Markets Authority (CMA) has granted approval for the issuance of the country’s first-ever Sukuk
Bond (“Sukuk”). Linzi Finco Trust, the Issuer of this pioneering Sukuk, named Linzi Sukuk that offers an
internal return of return at 11.13%, is set to raise KSh. 3 billion with the primary aim of developing 3,069
institutional housing units, in alignment with the Government’s ambitious Transformative Agenda.
Sukuk, also known as Islamic bonds, are financial instruments that comply with the Shari’ah principles,
making them a unique and inclusive investment avenue. This momentous approval by the CMA marks a
significant milestone in Kenya’s capital market diversification, providing both investors with an alternative,
socially responsible investment opportunity.
The issuance of the Linzi Sukuk bond underscores Kenya’s commitment to addressing the pressing need
for affordable housing through the provision of affordable financing, a pivotal component of the
Government’s transformative agenda. The Housing demand in Kenya is estimated at 250,000 units
annually. With a supply of only 50,000 new houses annually, there is an 80 per cent annual housing deficit.
The Government has a plan to deliver 200,000 housing units annually through collaboration between the
national government, counties and the private sector. To this end, there has been at least three projects
launched in the past three months, with 7,800 units in the offing.
This landmark Sukuk will contribute significantly to expanding the availability of affordable housing and
positively impact the lives of many Kenyan citizens. This innovative financing mechanism is expected to
attract both domestic and international investors seeking ethical and socially responsible investment
options.
The CEO, Mr. Wyckliffe Shamiah stated, “We are thrilled to embark on this pioneering journey with the
issuance of the first Sukuk bond. This financial initiative represents not only a new investment opportunity
but also a significant step towards addressing the housing deficit in Kenya and supporting the
Government’s transformative agenda.”
The Sukuk bond issuance is anticipated to set a precedent for further innovative capital markets
instruments in Kenya, demonstrating the Authority’s commitment to economic growth and development.
It also signifies CMA’s dedication to fostering an inclusive and diverse capital markets market that caters
to a broader spectrum of investors.
ENDS
BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY
The Capital Markets Authority (CMA) 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. CMA also regulates the structured commodity markets and online forex trading. 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. For more information, please contact: Antony Mwangi, Manager Corporate Affairs &
International Relations on amwangi@cma.or.ke

Nairobi cityscape - capital city of Kenya

CMA Directs Online Foreign Exchange Brokers to Enhance Disclosure Mechanisms

Nairobi, 21 September 2023… The Capital Markets Authority (CMA) released new guidelines directing online foreign exchange brokers to enhance disclosure mechanisms, promote transparency and ensure investor protection. To mitigate the risks and losses associated with participating in Contract for Differences (CFDs), the CMA is working with the licensed forex brokers to ensure there are appropriate disclosures and rollout of a comprehensive investor education programme.

CMA is working with licensed brokerage community and other stakeholders to develop standards to protect consumers by ensuring integrity in CFD products to deliver satisfactory outcomes for all stakeholders. A CFD is a contract between a buyer and a seller that stipulates that the buyer must pay the seller the difference between the current value of an asset and its value at contract time. CFDs allow traders and investors an opportunity to profit from price movement without owning the underlying assets. The value of a CFD does not consider the asset’s underlying value, only the price change between the trade entry and exit.
The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, said “in an effort to foster and deepen growth in the online forex trading industry, CMA has facilitated setting up of a Technical Working Group comprising of the licensed online foreign trading brokers as well as other stakeholders including peer regulators to assess the state of the market and propose recommendations to mitigate the challenges faced by investors, traders and licensed players”.
The CMA Chief Executive added that continued collaboration with peer regulators including the Central Bank of Kenya, the Communications Authority and the Financial Reporting Centre among others is key to protect Kenyans from unlicensed online foreign exchange brokers. CMA has so far licensed nine (9) non-dealing online foreign exchange brokers and two (2) money managers. The non-dealing online foreign exchange brokers are EGM Securities Limited (Trading as “FX Pesa”); SCFM Limited (Trading as “Scope Markets”); Pepperstone Markets Kenya Limited; Exinity Capital East Africa Limited; HFM Investments Limited (Trading as “HF Markets”); Windsor Markets Kenya Limited; Tadenex Limited (Trading as Exness); Ingot Africa Limited; Admirals KE Limited. The money managers are Standard Investment Bank (Trading as “MANSA X”) and Trade Sense Limited.

 

ENDS
BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY
The Capital Markets Authority (CMA) 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. CMA also regulates the commodity markets and online forex trading. 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. For more information, please contact: Antony Mwangi, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

Nairobi cityscape - capital city of Kenya

Over 1,000 brokers certified in two years

The number of certified stockbrokerage staff has risen to over 1,000 in the last two years following the introduction of a securities and investment certification programme by the Capital Markets Authority (CMA). .. Click the Link below for more..

Nairobi cityscape - capital city of Kenya

CMA yet again feted ‘Most Innovative Capital Markets Regulator in Africa’

Nairobi, 20 September, 2017…The Capital Markets Authority (CMA) has been distinguished by yet another organisation as the ‘Most Innovative Capital Markets Regulator in Africa 2017’. The Award hosted by Africa Investor was conferred in New York, on Monday 18 September 2017 and seeks to profile African capital market success stories to the global investment community.

Eight capital markets regulators in Africa were nominated for the Award including South Africa, Mauritius, Nigeria, Namibia, Botswana, Uganda and Tanzania.

‘The Authority is delighted to receive the Africa Investor Award for a second time, following our previous recognition by them in 2015. This recognition is a validation of the significant collaborative effort that stakeholders in the industry have expended to promote the Kenya’s capital markets as a premier investment destination’, Capital Markets Authority Chief Executive Mr. Paul Muthaura said.

The CMA was recognized for milestones achieved in the implementation of the Capital Market Master Plan (CMMP), which seeks to position Kenya as the Heart of African Capital Markets and the gateway for regional and international fund flows. These innovations are central to the mobilisation of investor funds through the capital markets that are critical in facilitating infrastructure development and reducing pressure on traditional funding sources from government revenue.

The Award judges sought evidence of commitments to increasing transparency and efficiency, support for innovative technologies, employment of best regulatory practice, openness to foreign investors and efforts to create an enabling environment for the capital markets industry.

ENDS

BACKROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

The Capital Markets Authority (CMA) 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. For more information, please contact: Antony Mwangi, Head of Corporate Communications on amwangi@cma.or.ke

Nairobi cityscape - capital city of Kenya

WORLD INVESTOR WEEK 2017

As a member of IOSCO,  CMA will be participating through several upcoming initiatives in collaboration with stakeholders in the World Investors Week to promote greater investor education and protection worldwide from October 2nd to 8th, 2017. 

The World Investor Week (WIW) is a global campaign to raise awareness about the importance of investor education and protection and highlight the various initiatives of securities regulators in these two critical areas. IOSCO members that participate in the campaign provide, in their own jurisdictions, a wide variety of activities such as launching of publications or services, promoting contests, organizing events such as workshops and conferences, and conducting local/national campaigns.

Nairobi cityscape - capital city of Kenya

CMA once again wins coveted Most Innovative Capital Markets Regulator Africa Award for 2017

Nairobi September 01, 2017….For the second year in a row the Capital Markets Authority (CMA) has been recognized as the Most Innovative Capital Markets Regulator Africa by the International Finance Magazine Awards 2017 (IFM Awards) in appreciation of initiatives to promote innovation and deepening of capital markets in Kenya.

The IFM Awards seek to honour individuals and organisations in the international finance industry that make a significant contribution to enhance innovation and drive performance.

Commenting on the recognition announcement, the CMA Chief Executive, Mr. Paul Muthaura said, ‘’The Authority, through the leadership of its Board, is committed to facilitating innovation in financial services through leveraging Kenya’s positioning in the region as an innovation centre. We continue to actively engage with and share experiences with peer regulators driving financial services innovation in markets as diverse as Australia and Abu Dhabi Global markets. These engagements have allowed us to develop a strategy framework for implementation of a regulatory sandbox to support fintech innovations in the capital markets.”

In parallel, in order to unlock the potential for local business to leverage the capital markets domestically, Mr. Muthaura noted that the CMA, in partnership with industry players, has been convening Business Incubator and Accelerator on the Listing Experience events which have provided an opportunity for 70 potential issuers to participate in structured engagements with the Transaction Advisors, the Nairobi Securities Exchange, Nominated Advisors, Lawyers, Auditors, Stockbrokers and Investment Banks, among other service providers including the CMA, to discuss their readiness for listing. This initiative is underpinned by the objective of the 10-year (2014-2023) Capital Market Master Plan of facilitating 3-4 new listings annually.

In its drive to fast-track the roll-out of new products and services in capital markets, CMA has also adopted a principle-based approval approach. As a result of this principle-based approval approach, CMA successfully issued two policy guidance notes (PGNs) to operationalize issuance frameworks for Asset-Backed Securities and Global Depositary Receipts and Notes. In the same year, the Authority also issued a PGN to facilitate the rollout of Exchange Traded Funds resulting in the first listing of such a product in Kenya.

In order to balance the Authority’s market regulation and market development mandates, within the same period, the Authority took significant strides in the implementation of the Code of Corporate Governance for Issuers of Securities to the Public (Corporate Governance Code) through the conduct of extensive stakeholder sensitization, the gazettement of a Stewardship Code and the introduction of a robust reporting template to ensure comparability of the quality of governance in different issuers as well as to inform the publication of corporate governance scorecards to empower investor decision making.

The recent gazettement of the Stewardship Code has placed Kenya at the forefront of global trend setters on corporate governance through equipping institutional investors to promote sustainable shareholder value and long term success in the companies in which they invest using the tools and practices established by the Stewardship Code.

In order to complement efforts to strengthen external oversight of sound practices in public issuers and licensed intermediaries, the Authority also launched over the period a web-based whistle blower portal to facilitate anonymous reporting of malpractices in the capital markets to complement its surveillance and investigations activities.

In line with the Government of Kenya’s aspiration to position Kenya as an Islamic Finance hub in the region and deepen the application of Islamic Finance within the economy, the Authority was honoured to host the joint financial sector regulators Project Management Office on Islamic Finance which drove a raft of targeted measures included in the Finance Act 2017 designed to support the growth of Islamic Finance in Kenya. The measures included; amendment to the Capital Markets Act to facilitate Shariah-complaint capital market products; amendment of the Income Tax Act to provide for equivalent tax treatment of Shariah-compliant products with conventional financial products; exemption from payment of Stamp Duty on transfer of title relating to Sukuk (the Shariah-compliant equivalent of conventional bonds) and to support Asset-Backed Securities transactions; and amendment to the Public Finance Management Act to allow for Government to raise capital through Sukuk.

With the view of walking the journey of market development with all investors and the general public in Kenya, the Authority was also pleased to champion robust investor education programs across all 47 counties in Kenya reaching approximately 20,000 people in 30 counties to date.

ENDS

BACKROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

The Capital Markets Authority (CMA) 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. For more information, please contact: Antony Mwangi, Head of Corporate Communications on amwangi@cma.or.ke

Nairobi cityscape - capital city of Kenya

CMA Issues Policy Guidance Note to facilitate the issuance of Global Depositary Receipts and Notes

Nairobi 13 July, 2017…In order to deepen and develop the capital markets through innovative products, the Board of Capital Markets Authority (CMA) has approved a Policy Guidance Note (PGN) for the listing and trading of global depositary receipts and notes.

A global depositary receipt or note (GDR/N) is a negotiable certificate issued, listed and traded on a securities exchange. The GDR/N certificate represents securities issued in another country. Where the certificate represents ownership of bonds instead of shares, it is referred to as a global depositary note (GDN).

There are two types of GDRs and GDNs; sponsored GDRs/GDNs are depositary securities in which the issuer of the underlying security has direct involvement in the issuance of the depositary securities. An unsponsored depositary security is issued by a depositary bank without the involvement, participation or consent of the issuer of the underlying securities. Outbound depositary securities are GDRs/GDNs, whose underlying securities are primarily issued in Kenya and whose certificates are to be issued as depositary securities in another country. Inbound depositary receipts are GDR/GDN whose underlying securities are primarily issued in a foreign country and which are issued as depositary securities in Kenya. Where the objective of issuing a GDR/GDN is to raise capital domestically or internationally, then the issuer must be involved in structuring the depositary receipts/notes as it would effect the listing and prepare any potential prospectus.

The CMA Chief Executive, Mr. Paul Muthaura noted, ‘the approval of the PGN is instrumental in the implementation of the Authority’s Strategic Plan 2013-2017 which is now in its final year of implementation and the 10-year Capital Market Master Plan. The PGN underpins industry’s efforts to develop and deepen capital markets products and services and provide a facilitative environment for cross border investments”.

GDRs/GDNs are further expected to promote Kenya as an attractive investment destination by providing a means for international investors to familiarise themselves with local companies that may issue GDRs and GDNs in other markets and create opportunities for international entities to raise capital in Kenya. As a result of their inherent characteristic of representing securities issued in another country, GDRs/GDNs also eliminate the cost and complexity of establishing custody arrangements in multiple countries.

Mr. Muthaura added that in the case of GDNs, debt issued in foreign markets and depositary notes in Kenya would be denominated in the Kenya Shilling, thus eliminating currency risk for the investors. In the alternative, Kenyan companies could issue GDNs into foreign markets to tap liquidity and appetite in those markets while remaining denominated in Kenya Shillings, thereby providing an alternative to the currency risk of Eurobonds.

The depositary receipts listed and traded at the Nairobi Securities Exchange, will be admitted to the main investment market segment and the issuer or depositary bank where unsponsored, will be required to have proportionate securities held in trust in a custody account. Investors in sponsored depositary receipts have the right to vote in any shareholder meeting through the depositary bank.

PGNs are a key tool used by the Authority to facilitate a principle-based approval approach, which empowers the Authority to fast-track roll-out of new products and services in capital markets. This approach allows for the market to be more diverse in terms of the portfolio of investable products, by ensuring a more timely response to the changing capital market dynamics.

The principle-based approval approach is in line with the amendments to the Capital Markets Act, effected in December 2013 that enhanced CMA’s role in facilitating market development in relation to the introduction of new products.

ENDS

BACKROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

The Capital Markets Authority (CMA) 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. For more information, please contact: Antony Mwangi, Head of Corporate Communications on amwangi@cma.or.ke

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