Press Release

CMA establishes a Financial Markets Law Review Panel

Nairobi, 29 March, 2019…The Board of the Capital Markets Authority (CMA), in line with the targets set out in the Capital Market Master Plan (2014 – 2023), has established a Financial Markets Law Review Panel of 16 leading domestic and international financial market lawyers and practitioners.

The Panel will play a key advisory role to the Board in exercising its mandate to ensure that capital markets law remains responsive to market realities and appropriately facilitative to evolving market expectations from both a domestic and international perspective.

In selecting appointees, the Authority’s board considered diversity, technical and professional background, track record, leadership record and capacity to provide independent perspectives. The appointees embody expertise in capital markets law, commercial law, tax law, venture capital and private equity, Islamic finance, legislative drafting, domestic and regional investment banking and financial market operations expertise.

The list of appointees is as follows:

International Legal Experts:       Habib Motari: Partner, Clifford Chance, London

                                                               Steven Galbraith: Partner, Slaughter and May, London

Domestic Legal Experts:              Paras Shah: Partner, Bowmans, Coulson Harney

                                                               Fred Ngari: Managing Director, Centum Capital

Tax Expert:                                         Kairo Thuo: Partner, Viva Africa, LLP

Islamic Finance Expert:                 Rahma Hersi: Partner, Gateway LLP

Domestic and International

Financial Markets Experts:          Alison Harwood: Former Global Head/ Practice Manager, Capital Markets and NBFI, World Bank Group

Ranjit Ajit Singh: Former Chairman, Securities Commission Malaysia

Naval Sood: Head Corporate Finance, East Africa, Stanbic Bank Kenya

Dr. Robert Barnes: Global Head of Primary Markets and CEO Turquoise, London Stock Exchange Group

Louise Kabucho: Former Director of Compliance UK and EU

Innovation and

Fintech experts:                               Elizabeth Howard, CEO Lelapa Fund and Africa Crowd Funding Association

                                                                Grant Brooke, Chief Executive, Twiga Foods

Domestic Legal

Experts:                                               Mbage Ng’ang’a: Chairman, Kenya Law Reform Commission

                                                               Lillian Matagaro, Deputy Chief Parliamentary Counsel, Office of the Attorney General and Department of Justice

                                                               

CMA Board Members:                   Chairperson, Board Technical and Policy Committee

                                                                Alternate to the Attorney General

                                                               

In announcing the members appointed to the Panel, CMA Chief Executive, Mr. Paul Muthaura observed, ‘the Financial Law Review Panel will serve as a critical reference for the Authority with regard to early identification of potential legislative gaps or challenges that could affect the functioning of the capital markets including as a consequence of ancillary legislation, and proposed legal and regulatory reforms’.

The Panel will meet 2 – 4 times annually and will appoint its chair during its inaugural meeting.

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 Regulatory Sandbox Ready to Receive Applications

Nairobi, 25 March, 2019…The Board of the Capital Markets Authority (CMA) has approved the Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) setting the stage for CMA to begin accepting applications for admission of fintech firms to its Regulatory Sandbox.

“We welcome fintech firms and innovators to apply for admission to the Regulatory Sandbox. Where they are successful, they will have a 12 month period to deploy and conduct live-tests of their innovative products, solutions and services”, CMA Chief Executive Mr. Paul Muthaura said. The Sandbox is expected to also accelerate CMA’s understanding of emerging technologies, support adoption of an evidence-based approach to regulation and facilitate deepening and broadening of Kenya’s capital markets.

In line with the Authority’s investor protection mandate, Sandbox Participants will be required to comply with certain minimum regulatory requirements prescribed by law. CMA will however assess regulatory requirements to be temporarily modified during a Regulatory Sandbox test on a case-by-case basis. In this context, the Authority will provide guidance where it considers that a proposed innovation is already clearly addressed under existing laws and regulations and therefore not fit for inclusion in the sandbox to avoid the creation of regulatory arbitrage between players rendering equivalent products or services.

Upon exit from the Sandbox, participants will be considered for:

  1. grant of an existing applicable license or approval to operate in Kenya subject to compliance with relevant legal and regulatory requirements;
  2. grant of permission to operate in Kenya subject to compliance with the specified terms of a letter of no objection in respect of a business falling outside existing regulatory provisions; or
  3. denial of permission to operate in Kenya in light of regulatory concerns identified during the testing phase.

Mr. Muthaura noted that ‘where the testing phase highlights that there is need for a broader legal or regulatory reform, the Authority will provide regulatory guidance through the various tools at its disposal ranging from new regulations to guidelines or notices pursuant to Section 12 and 12A of the Capital Markets Act. “The opportunities created by a robust testing phase will ensure that subsequent regulatory prescription and guidance will be informed by the operational realities and insights gained from the Regulatory Sandbox test. The PGN in all events specifies the circumstances in which the Authority can revoke or suspend an approval to participate in the Regulatory Sandbox as well as detailing the scope of regulatory and enforcement actions that can be taken in the event of participant misconduct.

Mr. Wycliffe Shamiah, Director of Market Operations and Head of the Authority’s Sandbox Review Committee noted that “at minimum, Sandbox applicants need to be companies incorporated in Kenya, including existing licensees of the Authority. For foreign applicants, they will be required to already be licensed by an equivalent capital markets regulator.” Fintech firms will be considered for admission based on their documented plans to offer innovative products, solutions or services with the potential to deepen Kenya’s capital markets following successful exit from the Sandbox.

“The Sandbox is however not an incubation centre and will not be able to receive applications based on ideas that have not been developed to the level of operational testing.” The Authority is nonetheless working with existing incubation centres who are in a position to support innovators to develop capital markets-related innovative ideas to a level of maturity at which they can then be admitted into the Sandbox. “The Sandbox will therefore not be considering for admission of purely conceptual proposed products, services or business models Mr. Muthaura explained.

The Authority will treat all non-public information received in connection with a Sandbox application or test as confidential and proprietary to the concerned firms. However, Fintech firms will be responsible for taking applicable measures to protect their intellectual property.

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 recovers Ksh458 Million in connection with suspicious trades in KenolKobil shares

Nairobi, 12 March 2019…The Capital Markets Authority (CMA) has secured the surrender of potentially illegal gains amounting to Ksh458 million in the context of the ongoing investigations into insider trading on KenolKobil shares. The funds surrendered to date relate to 90 percent of the quantum of suspicious trades identified through a total of 14 accounts that were frozen in October 2018 to facilitate investigations. The recovered funds will be paid into the Investor Compensation Fund.

The investigations thus far have established that a number of investors had been advised and encouraged to trade based on what may constitute material price sensitive non-public information resulting in trades in Kenol Kobil shares before the October 24 2018 announcement by Rubis Energie of their intention to take over 100 percent ordinary share capital of Kenol Kobil Plc at a premium. The investigations relating to the balance of the accounts flagged in connection with suspicious trading activities are ongoing.

Insider trading is an offence where a person in possession of privileged information which is material, price sensitive and non-public information either i) trades in securities relying on the information, ii) discloses the same to another person who trades based on the information or iii) encourages someone else to trade relying on the same information for gain or to avoid a loss.

Upon review of the investigation findings and recommendations, the CMA Board has resolved to initiate enforcement proceedings against the Kestrel Capital Executive Director, Mr. Andre DeSimone, Kestrel Capital Chairman & Founder, Mr. Charles Field-Marsham, and their stockbroking agent, Mr. Aly Khan Satchu, through issuing Notices to Show Cause. The recipients of the Notices to Show Cause have been granted an opportunity to formally respond to allegations made against them and to appear before the CMA Board to make any submissions before a determination is made.

The investigation findings did not establish evidence of potential misconduct with regard to the KenolKobil Chief Executive, Mr David Ohana. No enforcement proceedings will therefore be initiated against him.

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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