PRESS RELEASE

                                                                                                     

CMA admits FourFront Management Ltd to the Regulatory Sandbox

Nairobi, 24 September 2020…The Capital Markets Authority (CMA) has announced the admission of FourFront Management Limited to the Regulatory Sandbox, bringing the total number of firms admitted to the live-testing environment for capital markets innovations to seven. The financial technology (fintech) firm is a wholly owned subsidiary of Standard Investment Bank (SIB), a licensed investment bank.

FourFront Management Limited proposes to test a robo-advisory solution targeting 100 investors during a four-month period. A robo-advisor is a digital platform that provides automated, algorithm-driven financial planning and investing services with little to no human interaction. A robo-advisor collects information from its clientele about their financial situation and future goals through online survey and then leverages the data as a basis to offer investment advice and automatically invest client assets. Typically, robo-advisors offer easy account setup, robust goal planning, account services, portfolio management, and security features, attentive customer service, comprehensive education, and low fees.

CMA Acting Chief Executive Mr. Wyckliffe Shamiah said, ‘the admission of FourFront Management Limited to the Regulatory Sandbox will build our capacity as a regulator, to respond to the impact and support implementation of new technologies in the capital markets value chain.’ Investment technology is one of the core ways financial technology is likely to disrupt Kenya’s capital markets.

Stockbrokers and custodians are leveraging economies of scale to roll out low-cost, or even zero-cost portfolio management platforms, or to partner with robo-advisors to enhance financial access, quality and inclusion. In line with the CMA Strategic Plan 2018-2023, CMA aims to facilitate innovation and fintech adoption within the industry through the introduction of platforms, software and tools that enhance investment decision-making and contribute to accelerating the shift towards passive investments. A key interest for CMA in leveraging technology to drive the capital markets value chain is the implementation of robo-advice technology.

In compliance with the CMA Regulatory Sandbox Policy Guidance Note 2019, FourFront will be required to provide periodic reports to the Authority on the implementation of its test plans, achievement of test objectives, risks and challenges observed during the testing period and a final report prior to the expiry of its testing period.

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 This email address is being protected from spambots. You need JavaScript enabled to view it.

 

PRESS RELEASE

CMA publishes Guidance to Collective Investment Schemes on Performance Measurement and Presentation

Nairobi, 14 September 2020…The Capital Markets Authority (CMA) has today published new Guidance to Fund Managers of Collective Investment Schemes (CISs) on Valuation, Performance Measurement and Reporting (Guidance). The Guidance takes effect on 1 January 2021 and is expected to entrench international best practice in the capital markets by standardizing investment performance measurement and presentation by collective investment schemes.

‘The Authority has overtime noted inconsistencies in performance measurement and presentation in the collective investment schemes industry. These observations and feedback from the market necessitated the development of the new Guidance to enhance the comparability and consistency of information presented in performance reports generated by CISs’, said CMA Acting Chief Executive Wyckliffe Shamiah. The standardization of performance measurement and presentation is critical to investor protection and the fair treatment of customers.

‘The Institute of Certified Investment and Financial Analysts (ICIFA) supports the efforts by the Authority in standardizing investment performance measurement and reporting for CISs’. The Guidance will enhance accountability and transparency in the reporting of CISs’ performance which will in turn boost investor confidence. ICIFA looks forward to further collaboration with the Authority to provide capacity building to industry practitioners to ensure proper implementation and adherence to the Guidance’, said ICIFA Chief Executive, FA Diana Muriuki-Maina. 

‘The Fund Managers’ Association (FMA) has been pleased to provide input to the Capital Markets Authority, which has been considered in the preparation of this Guidance. In particular, the FMA welcomes the clarity and standardization that the Guidance provides, and that it is aligned with global professional performance standards’, said FMA Chairman, Jonathan Stichbury.

Under the Guidance, fund managers will be required to establish comprehensive, documented investment policies and procedures to govern the valuation of assets held by a CIS. The said policies will identify the methodologies that will be used for valuing each type of asset and will clearly indicate how performance will be calculated, measured and presented. Fund managers will also be required to have policies and procedures in place to detect, prevent and correct pricing errors that result in material harm to CIS investors. The Guidance requires fund managers to provide performance measurement reports to the Authority and all existing and prospective investors, within 21 days after the end of each quarter.

In determining the total assets under management, fund managers will consider: - the aggregate fair value of all assets without double counting any assets, actual assets managed by the fund manager including fee-paying and non-fee-paying portfolios and assets outsourced to another fund manager.

If a fund manager of a CIS chooses to use a benchmark for risk and return analysis, it shall disclose in the performance report the benchmark description, including the key features of the benchmark or the name of the benchmark for a readily recognized index or other point of reference. The fund manager will also disclose the periodicity of the benchmark if benchmark returns are calculated less frequently than monthly. The benchmark used shall be relevant to the fund strategy, of the same return type, in the same currency and for the same periods for which the returns are presented.

Portfolios will be valued daily in line with the definition of fair value under International Financial Reporting Standards (IFRS 13). However, external valuations for real estate investments will be performed by an independent registered property valuer at least once every three years.

The Guidance intended for all CISs approved by the Authority will be read together with the Capital Markets (Collective Investment Schemes) Regulations, 2012. It is aligned to the Principles for the Valuation of Collective Investment Schemes by the International Organization for Securities Commissions (IOSCO), who is the global standard setter for capital markets regulation. The Guidance is also aligned to the Global Investment Performance Standards (GIPS).

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 This email address is being protected from spambots. You need JavaScript enabled to view it.

BACKROUND INFORMATION ON THE FUND MANAGERS ASSOCIATION

The Fund Managers Association (the FMA or the Association) is a Kenyan trade association established in 2008 to promote responsible and sustainable asset management. Membership in the Association is open to Capital Markets Authority (CMA) licensed organizations who manage institutional or individual investors’ funds. By investing in securities throughout East Africa, FMA members contribute to the growth, development and sustainability of Kenya’s capital market and economy. The FMA also supports its members and clients by actively engaging with policy makers, regulators, and other stakeholders through discussions and submission of ideas, proposals and concerns.  These include the raising of ethical standards, development of new products, implementation of new regulations and training requirements.

PRESS RELEASE

CMA grants African Diaspora Asset Managers Ltd fund manager license

Nairobi, 11 September 2020…The Capital Markets Authority (CMA) has granted a fund manager’s license to African Diaspora Asset Managers Limited. The fund manager will target Kenyan and African clients in the diaspora. In addition, it will adopt an ambitious pan-African investment strategy for diversification and return enhancement.

The fund manager will offer financial products and services in asset management, unit trusts, financial investment management, financial planning, wealth management, discretionary portfolio management, property development and private equity.

CMA Acting Chief Executive Mr. Wyckliffe Shamiah said, ‘The asset management sector is an important component of capital markets. This sector includes the management of funds owned by institutions such as pension funds and insurance companies, and the independent management of funds on behalf of retail investors, which can be distributed as collective investment schemes (or unit trusts).’ Some products offered by fund managers, for instance collective investment schemes, are important because they provide an opportunity for small investors to have access to professionally managed, diversified portfolios of assets.

African Diaspora Asset Managers Limited Chief Executive Officer Mr. Runyah Lewa noted that his firm is interested in collective investment scheme that will initially comprise of five funds, subject to the Capital Market Authority’s consent and subsequent registration. The proposed schemes are: - ADAM Money Market Fund, ADAM Fixed Income Fund, ADAM Equities Fund, ADAM Property Fund and ADAM Business Growth Fund. The latter will be a Private Equity Fund specifically seeking to provide debt and equity capital for SMEs in Kenya and Africa.

On his part the Kenya Investment Authority (KIA) Managing Director Dr. Moses Ikiara observed that domestic and diaspora investors were as important as foreign investors as Kenya seeks to grow Foreign Direct Investment (FDI). ‘We look forward to working closely with the Capital Markets Authority to achieve this goal’.

The approval brings the total number of licensed fund managers to 25.

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 This email address is being protected from spambots. You need JavaScript enabled to view it.

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