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CMA publishes Draft Regulatory Sandbox Policy Guidance Notes

Nairobi, 19 December, 2018…The Capital Markets Authority (CMA) has announced the publication of a draft Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) which will facilitate the admission of fintech firms to a Regulatory Sandbox, as outlined in the CMA Strategic Plan 2018-2023. The PGN sets forth the eligibility, application, safeguard, and testing requirements for applicants.

A Regulatory Sandbox is a tailored regulatory environment which allows firms deploying innovative products, solutions and services to conduct live tests for their innovations within a limited scale. The innovations to be tested should have the potential to deepen and develop Kenya’s capital markets.

‘The Regulatory Sandbox is intended to help accelerate the Authority’s understanding of emerging technologies and support evidence-based approaches to regulation that advance the goals of capital markets deepening and development; and investor protection in line with the 10-year Capital Markets Master Plan’, said CMA Chief Executive Paul Muthaura.

The Regulatory Sandbox is available to firms incorporated in Kenya, other East African States and countries whose securities market regulators have entered into Memorandum of Understanding with CMA. The initial testing period for financial technology (Fintech) firms admitted to the Regulatory Sandbox shall be determined through consultations between the Authority and applicants, however, the testing period shall be twelve months subject to an extension by CMA. Applicants will be required to pay to the Authority Kshs10,000 upon submission of application forms.

‘The publication of the Regulatory Sandbox PGN is a critical milestone towards fostering and promoting the responsible growth of fintech by providing a supportive regulatory environment where promising innovations can operate, subject to restrictions on client access and investment size’, said Mr. Muthaura. The Regulatory Sandbox underpins CMA’s efforts to build capacity to respond to the impact of and support the implementation of new technologies in the capital markets value chain. It is hinged on the regulator’s strategic objective of leveraging technology to drive efficiency in the capital markets value chain.

The Regulatory Sandbox provides reduced time-to-market at potentially lower costs, better access to finance, more innovative products reaching the market and contained consequences of failure as a result of restrictions on client access.

Mr. Muthaura added, ‘supporting Fintech through the Regulatory Sandbox will call for stronger coordination with other financial sector regulators to ensure that there are no gaps or overlaps and that scalable solutions touching on multiple sectors are able to be put in place where necessary.’ The regulators under the Joint Financial Sector Regulators’ Forum are working to establish a Fintech support facility with dedicated personnel to facilitate timely follow up and resolution of inquiries on FinTech products and services.

The CMA with support from the Financial Sector Deepening Kenya (FSDK), on-boarded consultants to finalize a policy framework on the Regulatory Sandbox. Consultants also conducted a landscaping study aimed at establishing the status, size and the relevant FinTech firms whose innovations are aligned to the Authority’s regulatory sandbox initiative with the potential to revolutionize how financial products and services are offered and taken up in the country. The findings from the study formed the basis upon which the PGN was developed.

Other capital markets regulators that have established Regulatory Sandbox frameworks include United Kingdom Financial Conduct Authority, Australian Securities and Investments Commission, Monetary Authority of Singapore and Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market.

The Policy Guidance Note is open for scrutiny by stakeholders and the general public, for 30 days to 20 January, 2019 in line with the Constitution of Kenya which prioritises effective public participation in the policy making process.



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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