CDSC Board Members present

Chief Executive Officer, Management and Staff of CDSC

Chief Executive Officer, Nairobi Securities Exchange

Chairpersons, CEOs of intermediaries and Industry Associations, FMA, KASIB, KBA

Distinguished Guests

All Protocols Observed

Good Morning!

I am delighted to be here today at in this Webinar and would like to thank each one of you for your presence.

Having a functional securities lending market is a key component of efficient and liquid securities markets. The ability to borrow a stock enables market participants to sell short, and smoothens the settlement process in the cash market. It also enhances arbitrage activity between the derivatives and cash markets, aiding the liquidity of both.

For us at the Authority, this event marks a serious milestone in a journey we have walked for many years now, because the transactions involve two parties on agreed terms. The beneficial owner (lender) temporarily transfers title of the security and associated rights and privileges to a borrower who is required to return the security either on demand (commonly referred to as an open loan) or at an agreed date in the future (commonly referred to as a term loan.

The borrower, being the new legal owner of the security receives dividends, interest, corporate action rights etc., but is required to “manufacture” all economic benefits back to the original lender. The “manufactured” payment from the borrower to the lender is a substitute payment that replaces the dividend or interest the lender would have received had the security still been in custody. The lender maintains an economic interest in the security on loan and therefore is still exposed to the price fluctuations of the security as if it was still physically held in his custodial account. During the term of the loan, proxy voting rights transfer from the lender to the borrower of the security, as the borrower has legal title over the security. However, under the legal contract between the lender and the borrower, the lender has the right to recall the security for any reason, including voting at an annual general meeting (AGM) or extraordinary general meeting (EGM).

Ladies and Gentlemen, the question is what then motivates securities lending and borrowing?

  • Market-Making and Sell Fail Protection - When market-makers that are required to make two–way prices in a security. The market-makers do not hold every security for which they make a market, and the only reason they are able to perform their function is because they can borrow a security to settle a purchase request from their clients.
  • Collateralization- A significant contribution to the demand for high quality sovereign debt in a securities lending program is the requirement to borrow the security in order to collateralize other transactions, including securities lending.
  • Arbitrage -Arbitrage strategies exist to take advantage of discrepancies between prices or markets, for example:
  • Dividend Yield Enhancement: Discrepancies between the net dividend received by beneficial owners in different markets.

The structure of securities lending varies significantly around the world. The most common structure globally is through over-the-counter (OTC) transactions: an intermediary takes on counterparty risk in exchange for collateral from the borrower. However, in a screen-based, exchange-traded system, there is a counterparty that collects collateral. In addition, market events during the financial crisis reminded securities lending participants that securities lending has a risk/return profile and should be evaluated based on the risks inherent to each lending program’s specific structural characteristics, just like any other investment decision.

It is for the above reasons that CDSC has chosen to take a cautious path by conducting a pilot test to ensure that the final product is homegrown and appropriate to our Kenyan market. It is important to note that out of the six firms that are currently in the Capital Markets Regulatory Sandbox, CDSC was the fourth firm to be admitted. The application by CDSC for a screen-based Securities Lending and Borrowing is welcome and timely. While the existing Regulations envisage a bilateral model of SLB, the screen-based model is expected to allow any investor perform an SLB transaction through approved Central Depository Agents. If the test is successful, the current Securities Lending and Borrowing Regulations will be amended to include the screen-based model and address other issues which have hampered the uptake of the bilateral SLB product.

In line with the expectations of the Capital Markets Master Plan, the Authority lauds the significant work has been expended by the CDSC to ensure that the necessary technical arrangements and infrastructure to facilitate allow for SLB in Kenya’s capital markets. With the introduction of securities lending, investors will be able to allocate all or part of their holdings at CDSC to a lending pool. Market participants (not restricted to market makers) will be able to borrow securities from this pool for a fee paid to the holders, which can then be applied towards meeting delivery obligations resulting from short selling. This will significantly boost market liquidity which currently is quite low with an annual turnover ratio of 7-8% by increasing the volume of securities potentially available for trading and further increases depth and efficiency in the capital markets through price discovery.

It is also a a significant step towards achievement of the MSCI Emerging Market status for Kenya and for Nairobi to enter the Global Financial Centre Index (GFCI) as outlined the Capital Markets Master Plan, which further advocates for innovations to broaden product and service offerings, deepen market participation and drive transformative economic development.

Ladies and Gentlemen, as I conclude, I wish to thank you the market for your support in the development of the short term capital markets strategy in June 2020 and wish to confirm that the strategy has been progressed to high level policy makers. In summary the strategy which seeks to centrally position the Kenyan capital market to support rapid post Covid-19 economic recovery is anchored on 5 key pillars, namely:

  • Sustaining market vibrancy by enhancing liquidity of existing products (which is clearly aligned to the CDSC initiative);
  • Supporting market-based long-term funding for all sizes of business to jump-start economic recovery and growth through flexible and smart regulatory frameworks;
  • To support alternative approaches to increase retail and institutional investor and participation in the primary and secondary capital markets leveraging ICT and specifically M-commerce;  
  • To support business continuity by embracing digital technology and application of ICT in all aspects of capital markets business (except where impractical); and
  • To support capital markets stakeholders to weather the Covid-19 impact and sustain businesses

I urge us all to play your respective roll in implementing this strategy which will see the capital markets take its rightful position in catalysing Kenya’s economic recovery. Once again, congratulations CSDC for this bold initiative to make our markets more vibrant and liquid and thus making it more attractive to both local and foreign investors.

Asanteni sana.



Good morning.

Today is a truly landmark event as we welcome you all in the hope of securing your final validation of the Capital Markets Regulatory Sandbox Policy Guidance Note. This journey began in earnest on June 30, 2016 when the Authority hosted a stakeholder workshop to present a policy framework for Fintech oversight in Kenya modelled on a Regulatory Sandbox and I am proud to note we are now at the cusp of operationalizing that policy.

The Authority’s commitment to the introduction of a sandbox is firmly drawn from the Kenya Capital Markets Master Plan 2014/2023 which identifies technological innovation as one of the 5 centers of excellence of the Kenyan capital markets our industry aspires to deliver.

This has seen us taking progressive steps to create a conducive environment to unlock the potential of the FinTech space in Kenya including the signing of cooperation agreements with regulators with well-established FinTechs frameworks such as the Australia Securities and Investments Commission (ASIC) and the Abu Dhabi Global Markets Financial Services Regulatory Authority. Further the Authority has leveraged from these cooperation arrangements to build significant capacity in the area of FinTech to enhance its competence in regulating this ever-evolving space. We have also benefited from strategic engagements with domestic partners such as Nailab, IBM, i-Hub, ICT Authority, the Financial Sector Regulators Forum as well as external organizations such as IOSCO, World Bank Group and GFIN all in trying to make an informed decision on how to best oversight the FinTech space in Kenya. This journey has also seen us making extensive submissions to the Task Force on Blockchain and Internet of Things in order to contribute to the National Policy on Financial Innovation

As a management team, have been lucky to work within a highly responsive context given the Board of the Authority, in formulating its Strategic Plan 2018-2023, committed to driving the leverage technology across the entire capital markets value chain, as one of our key strategic priority of the Board. To this end the Authority has been willing to proactively review its supervisory and regulatory model to take into consideration the fast-changing environment cutting across capital markets’ product/services design, infrastructure and supervision. I therefore wish to thank the Board for their guidance, strategic focus and continued support

Ladies and Gentlemen: It is indeed a compelling time to be an innovator in this technological age as Kenya cements its reputation as a global technological powerhouse, building on the strong foundations of the globally acclaimed M-PESA innovation.

As a regulator we are humbled by the sheer number of innovators in Kenya and beyond who have positively responded to our calls for consultations on how to create an innovative environment to test their product before they venture into commercial scale. This validation workshop is the culmination of an extensive public consultation and stakeholder engagement process undertaken in coming up with a market- reflective and facilitative Policy Guidance Note.

The PGN was put out for public exposure between December 12, 2018 and January 21, 2019 in line with the Constitutional imperatives to ensure effective public participation in the policy making process. Further, the Authority proactively engaged key relevant stakeholders including FinTech firms and innovators, capital markets industry stakeholders, peer regulators, law firms and international organization, amongst others to obtain feedback on the proposed Policy Guidance Note in a bid to ensure smooth implementation. The response has been outstanding and today we will be presenting a summary of your feedback, the revised PGN and the next steps towards the launch and subsequent ‘go live’ of the regulatory sandbox

Ladies and Gentlemen, this process has been driven by our strategic objective to enhance the Authority’s strategic influence under our Strategic Plan 2018-2023. We believe that well-structured partnerships with key stakeholders are a critical catalyst for the growth and development of our capital markets. We have in this regard, initiated discussions with fellow sectoral regulators on concerns raised touching on their jurisdictional remit and I am pleased to report we have received positive feedback towards implementing the Fintech Regulatory Sandbox.

The successful implementation of the Regulatory Sandbox is dependent on putting in place the necessary governance, internal processes and procedures at the Authority. To this end the Authority has set up a ‘Sandbox Review Committee’ (SRC) whose Mandate is to provide tailored, coordinated regulatory support, dedicated to the Sandbox project and ecosystem. The ‘Sandbox Review Committee’ will additionally serve the primary function of reviewing and considering sandbox applications, monitoring the implementation of the test plans by successful sandbox entrants and transition to license categories.

Our partnerships will strengthen this arrangement through catering for capacity building to the Sandbox Review Committee (SRC) on areas including but not limited to Intellectual Property Rights protections, entity establishment and Cybersecurity, to co-opting additional expertise into the team that will be evaluating applications and assisting in conducting tests within the regulatory sandbox.

Ladies and Gentlemen, many of you may already be asking yourselves whether the Regulatory Sandbox will serve FinTechs across the Financial Services industry in Kenya. I would like to clarify that the CMA Regulatory Sandbox can only serve Financial Innovations that are directly within the regulatory perimeter of the CMA. We appreciate that we are ahead of our peers in this area and acknowledge that each Financial Sector Regulator is at various levels of preparations to oversight FinTechs. I would also therefore wish to clarify to the audience so as to manage your expectations that only capital markets specific FinTechs will be allowed to participate in our sandbox pending further concurrence from peer regulators.

We however envisage a single Financial Sector Regulatory Sandbox in the future which will benefit largely from lessons learnt from the CMA model. As a matter of fact, the Boards of the Financial Sector Regulators have discussed FinTech as one of the key areas of cooperation and I am delighted to announce that we are in the process of finalizing a FinTech support facility to act as a one stop shop for all FinTech related queries touching on the financial sector. facility will address growing inquiries as well as provide both information and other effective regulatory support services to both domestic and international financial innovators providing linkages with other sectoral regulators on queries touching on their respective regulatory perimeters.

Ladies and Gentlemen, allow me to emphasize that the emergence of these technologies needs to be treated with due caution. On the one hand, they introduce opportunities to drive additional demand for capital market products and services; and on the other hand, they also have the potential to introduce new prudential risks that can, not only destabilize the market, but also present a new scope of market conduct risks that can put-off retail investors for years to come if not properly managed. The Authority therefore continues to urge members of the public to exercise caution in participating in any Initial Coin Offerings and Cryptocurrency transactions lacking regulatory sanction.

At this juncture , Ladies and Gentlemen, allow me to note our recent admission to the Global Financial Innovation Network, a move to support the transformation of the capital markets in Kenya through nurturing innovation. The Global Financial Innovation Network (GFIN), an international network of 29 financial services regulators and related organizations, committed to supporting financial innovation. GFIN seeks to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. This includes a pilot for firms wishing to test innovative products, services or business models across more than one jurisdiction. It also aims to create a new framework for co-operation between financial services regulators on innovation-related topics, gaining insights and sharing different experiences, lessons and approaches. This cements our efforts to support innovation in the capital markets, noting the important role of financial technology (Fintech) as a key enabler of performance excellence under the 10-year Kenya Capital Market Masterplan, 2014-2023.

In this spirit, it would also be opportune to commend the Nairobi Securities Exchange for the launch of a twin innovative initiative- the Ibuka Incubator and Accelerator Program. Ibuka will enable the NSE host local Kenyan companies on a 10 month incubator programme aimed at enhancing their visibility, offer the companies’ access to a host of experienced financial advisors and consultants for expert advisory, and exposure to local and international investors.

Ladies and Gentlemen, going forward we expect to receive further input on the PGN that will be presented to you shortly after which it shall be finalized and approved for implementation. We will be sharing the operationalization plan by the end of today’s session Thereafter, the Authority shall embark on receiving and reviewing sandbox applications based on the defined criteria for consideration and admission to the sandbox. This will herald a new phase in the growth trajectory of our capital markets with the coming into force of a guiding policy and legislative framework on adoption of financial technology.

With that Ladies and Gentlemen, we count upon you our fellow regulators, key strategic partners, capital markets industry stakeholders, innovators and Fintech firms for your critical support for the successful implementation of our Regulatory Sandbox initiative.

In conclusion, I extend my sincere gratitude to all of you as the key stakeholders and for your collaboration and support that will enable all of us make strides in fostering innovation and the adoption of technology in the capital markets industry. My very specific gratitude to CGAP and FSDK for your excellent support throughout this journey

I am optimistic that this programme will promote product development, revolutionize and democratize access to the capital markets by Fintech firms and companies in Kenya.

I wish you fruitful discussions that will translate into finalization of a facilitative, relevant and effective Policy Guidance Note.

Thank you!


Your Excellency, the President of the Republic of Kenya

The Cabinet Secretary, National Treasury, Mr. Henry Rotich

Cabinet Secretaries Present

Principal Secretaries Present

Director General, Islamic Research and Training Institute

The Chairman and Board of the Capital Markets Authority

Representatives from the Media

Distinguished Delegates

Ladies and Gentlemen;

All Protocols Observed

Good morning and welcome to this milestone conference on Islamic Finance.

Let me start by thanking the Conference Organizers, the delegates who have traveled from far and wide, all sponsors and partners for coming together to make today’s event a reality. It is a pleasure to see all of you gathered here today with the focus of taking the necessary steps to unlock the potential of Islamic finance for the local, regional and international economies.

Ladies and Gentlemen; I’m honored to have been accorded the opportunity to kick of the conference deliberations by discussing the Development of a robust Islamic Capital Market in Kenya to Support Economic Growth in the country. As we are all aware, Capital Markets, as key drivers for long-term resource mobilization, play a central role in raising savings and investments levels.

Alluding to the remarks of the Cabinet Secretary to the National Treasury,  we must consistently seek to develop niche markets where Kenya has a comparative and competitive advantage with a view to supporting the domestic capital markets to effectively position themselves on the regional front wherever we see that potential for such development is largely untapped. The Islamic financial markets are one such niche area.

Distinguished Guests; to put this into context, allow me to briefly provide a snapshot of the current status of the Islamic Finance market in Kenya.

Two fully fledged Islamic banks have been licensed, while five (5) other conventional banks are offering Shariah compliant services and products through fully operational “Islamic Windows”. The Authority has also licensed one Islamic fund manager and approved one Islamic Collective Investment Scheme. The current regulatory framework also caters for the establishment of Islamic Real Estate Investment Trusts. In the Insurance sector, one entity has been authorized to act as an Islamic insurance (Takaful) broker for general Takaful products. This is in addition to one fully fledged Takaful provider. We have also seen the launch of the first Re-Takaful Insurance (Islamic Re-insurance) in the country. Finally, one Shariah compliant Sacco began operations in 2014 resulting in representation of Islamic products and services across the financial infrastructure in Kenya.

Ladies and Gentlemen; in this context, with the guidance of the National Treasury, the joint Financial sector Regulators under the leadership of the Authority have a priority objective of accelerating the building of critical mass for the development of a significant Islamic Financial Markets industry.  To this end, efforts are being applied to broadening the range of available Shariah-compliant products and services that, in the medium term, may increase Kenya’s ranking in the Islamic Finance Country Index (IFCI).

As at December 2014, the Global Islamic Finance Report (GIFC), the developers and publishers of the Index, ranked Kenya at number 22 globally, and 3rd in Africa, behind Sudan and Egypt, but ahead of South Africa, Tunisia, Algeria, Nigeria, Senegal and the Gambia. Our current index score is 2.2, compared to 14 and 6 for Sudan and Egypt respectively. Our ambition, as outlined in the Capital Markets Master Plan as launched by the National Treasury, is to increase this score to 15 which would ideally raise us to approximately position 15 globally (bearing in mind we are not the only jurisdictions develop efforts in this direction) .

In order to gain this traction, ladies and gentlemen, there are some priorities we need address:

-      Firstly, level the playing field and create an enabling environment for Islamic finance to develop, while being mindful of attendant risks. This means adapting financial regulations that take into account the defining features of Islamic finance but that do not impose a disproportionate burdens on Islamic finance institutions as well as harmonizing the tax treatment of Islamic finance products with similar conventional products;

-       Secondly, develop shariah compliant liquidity mechanisms to help these institutions manage their liquidity - we believe that the area in which the Islamic capital market could provide relevant products include long-dated securities that represent asset-based obligations i.e. Sukuk as well as Shariah Compliant Collective Investment Schemes;

-       Thirdly, establish a cross-sectoral National Shariah Advisory Board to enhance standardization of products and services across the financial sector; 

-       Fourthly, undertake a vigorous consumer education campaign to enhance awareness of these products and

-       Fifthly, consistently develop technical capacity at both the institutional and individual level.

Ladies and Gentlemen; Efforts are underway to improve on this segment to support the development of an enabling environment to promote the use of Islamic financial products in Kenya’s financial markets. These efforts, which began in earnest in 2011, have culminated in the establishment of a cross-sectoral Islamic Finance Project Management Office to coordinate developmental efforts across the financial services sector.

Distinguished Guests; allow me to briefly highlight the scope of the Islamic Finance Project Management Office;

In December 2015, with the support of the National Treasury and in conjunction with the Financial Sector Regulators Forum (FSRF), through technical and funding support from Financial Sector Deepening Africa (FSDA), a Project Management Office (PMO) was established to help design and coordinate a range of interventions to enhance the development of Islamic Finance Markets in Kenya. 

The project will benefit from specialist consultant(s) over at least a two (2) year period to work closely with the financial sector regulators on the development of an Institutional, Policy and Regulatory Framework for the Islamic Finance Industry in Kenya. The PMO will lead coordination of a cross-financial sector program which includes regulatory reform, the establishment of a National Shariah Supervisory Board, capacity building and awareness creation. The PMO is expected to play a vital role in achieving a set of transformative actions aimed at positioning Kenya as a favourable investment destination for the Islamic world as well as the global ethical investment pools in line with the Vision 2030 aspirations of establishing Nairobi as an International Financial Centre.

Ladies and Gentlemen; the Islamic financial markets in Kenya are currently at a very nascent stage. Through the development of appropriate capital market products, this will play a complementary role to the Islamic banking, Takaful, and shariah compliant SACCO industry in broadening and deepening the Islamic financial sector.

In this regard, Ladies and Gentlemen, the Authority’s development effort is anchored on the adoption of a comprehensive, multi-pronged approach to creating a viable market for the effective mobilization of Shariah compliant funds. This include Facilitating the development of products and services related to the Islamic capital market; Creating a viable market for the effective mobilization of Islamic funds; Ensuring that there is an appropriate institutional, policy and regulatory framework for the Islamic capital markets; Enhancing the profile of the Islamic capital markets domestically.

As I conclude my remarks, Ladies and Gentlemen, I leave you with the words of Christine Lagarde (IMF MD), on Islamic fiannce: “The challenge for policymakers is to help this market reach its full potential. Unlocking the true potential of Islamic finance requires strong leadership. It also requires strong cooperation among all stakeholders. Together, we can foster a version of Islamic finance that can deliver on all its promises. That is to promote financial inclusion and stability, meet the needs of financially underserved populations, lift potential growth, and create better opportunities of all people”.

Thank You; Shukraan


Allow me to start by recognizing the presence of distinguished delegates from;

         Capital Markets & Securities Authority of Tanzania

         Representatives from CBK

         Representatives from financial sector regulators SASRA, IRA

         Nairobi Securities Exchange,

         Unclaimed Financial Assets Authority (UFAA)

         Financial Reporting Centre (FRC)

         Market intermediary representatives,

I would like to note special appreciation to all our facilitators for the next two days who will undoubtedly add a great deal of colour and flavor the topic.

It is my pleasure to extend a warm welcome to all of you for this important seminar to engage on pertinent issues facing our capital markets today.

The subject of fraud knows no borders and has an undeniable impact of slowing the deepening of investments in the greater economy and in the capital market in equal measure. But we appreciated that even as we tackle the topic of fraud we need to strengthen understanding of the issues related to wider risk management and the increasing compliance obligations in our globalized markets. We are therefore very grateful to our colleagues from the Unclaimed Financial Assets Authority, the Financial Reporting Centre, the Capital Markets Fraud Investigation Unit and PwC for joining us over the next two days.

As a sector, the capital markets have been far from immune from the ravages of fraud schemes affecting publicly-traded companies, benchmark manipulation, issuers of corporate bonds and even the government bond markets. These failures have served to reinforce some of the doubts seen in local and global markets following the global financial crises with regard to the overall integrity of global capital markets.

In this context, we must be conscious that the avenues to tackle fraud and risk cannot be limited to only revisions of the law and regulations but goes to the fundamental perception of risk and the operation and internal structures put in place to influence culture and behavior.

In line with the aspirations of the 10 year Capital Markets Master Plan, the Authority has been pleased to see robust industry initiatives to diversify the available capital market products to include Real Estate Investment Trusts (REITS); the introduction of derivatives is on the horizon and with the support of the principle-based approach to rule making we will soon see Exchange Traded Funds (ETFs) in operation.

But the introduction of these new products comes with risks, which need to be appreciated and addressed.

In this technological era, we have seen improved access to the capital markets, but also potential increased vulnerabilities of market players and investors to fraud and deceit. Financial crimes such as market manipulation, money laundering, cybercrime, creative accounting and other financial statements fraud benefit just as much from technology unfortunately.

In an increasingly interconnected world further issues that confront us in the capital markets are money laundering and terrorism financing that have potentially devastating economic, security and social consequences locally and globally.

Success in fighting money laundering calls for increased effectiveness in tackling the predicate offenses that generate the proceeds to be laundered through the financial and other economic sectors. In this context, the predicate offenses often fall well beyond the jurisdiction of the Authority or other financial sector regulators represented here including drug and human trafficking, corruption, tax evasion, poaching, piracy among others. Nonetheless the adverse consequences of money laundering translate to reputational, operational, legal and concentration risks for the financial sector.

In this context, the Government has shown a high level of political commitment in overseeing the stability of the country’s financial sector through overseeing the implementation of requisite laws and measures which are benchmarked against international best practices and the recommendations of the Financial Action Task Force (FATF) the global standard setter for AML/CFT standards. 

At a sector regulatory level the Authority has taken a number of steps to tackle areas which have featured prominently in order to protect the integrity of our markets;

        Adoption of a risk based supervision approach in 2009, improving the capital market’s regulations

        Strengthening Corporate governance for issuers and intermediaries, including the role of independent directors on an issuer’s corporate Board, the protection   of minority shareholders, the importance of independent audit committees, and mechanisms to protect against conflicts of interest presented by related-party transactions;

      Assessing Internal and external Auditors audit standards, including auditors’ independence and the effectiveness of audit standards and oversight, and requirements for auditor rotation;

       Broadening Issuer disclosure requirements, including management’s discussion and analysis of material events and factors likely to have an impact on the issuer;

       Tightening Bond market regulation and transparency, including the types of financial disclosures required of bond issuers and the transparency of bond market price-setting mechanisms;

      Strengthening the conduct and governance obligations of market intermediaries, through adequate controls and procedures and to ensure that material non-public information they acquire about an issuer is not misused; and

        The introduction of strict liability for insider trading.

The purpose of this seminar is to provide a forum for the entities involved in the capital markets sector in the region to brainstorm on how to tackle the vices that continue to cause jitters among our investors. There is a need for a holistic outlook on the current financial sector scenario through sharing regulatory viewpoints, assessing anti-fraud resources and tools available, sharing knowledge coupled with experience and best practices with an objective of a harmonized approach across the sector both locally and regionally towards prevention and mitigation on the emergent fraud risk.

The Authority will on its part continue working closely with other public bodies and regulators such as Unclaimed Financial Assets Authority, Financial Reporting Centre, Insurance Regulatory Authority, Retirement Benefit Authority, the SACCOs Regulatory Authority and Central Bank of Kenya just to mention but a few .

The Authority continues to interact with market intermediaries and their associations (Kenya Association of Stockbrokers and Investment Banks (KASIB) Fund Managers (FMA), the Association of Custodians as well as market infrastructure providers like the Nairobi Securities Exchange and Central Depository Settlement Corporation, in facilitating smooth operations and a responsive regulatory environment for the development of Kenya’s capital markets as an investment destination of choice.

We look forward to hearing from UFAA and FRC on their role, expectations from players in the sector and to clarify issues which the entities operating in the capital market may be grappling with as they endeavor to ensure compliance with the underlying statutory obligations to these two agencies.

Ladies and Gentlemen it is now my pleasure to thank you for finding time to attend this forum and now declare the seminar officially open.

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.

Thank you.

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