CMA seeks to review Collective Investment Schemes Regulations in response to market dynamics
Nairobi 01 December 2020… As part of its market deepening strategy, the Capital Markets Authority (CMA), with the support of FSD Africa, has onboarded a consultant to review the Capital Markets (Collective Investment Schemes) Regulations, 2001 to make them more robust and facilitative to market dynamics.
The CMA Chief Executive, Mr. Wyckliffe Shamiah, explained that the proposed legal framework review is designed to address stakeholders’ concerns with the current framework and facilitate the development of a robust asset management sector, in line with the aspirations of the 10-year Capital Market Master Plan (2014-2023). The Master Plan projected that assets under management in Collective Investment Schemes (CISs) in Kenya were expected to increase from Kshs40 billion ($ 360 million) in January 2014 to Ksh132 billion ($ 1.2 billion in 2020), rising to Ksh220 billion ($ 2 billion) in 2023. As at 30 June 2020, assets under management in CISs was Ksh88.1 billion ($ 801 million). The growth projections have been slowed down largely by the effects of Coronavirus pandemic that affected most sectors of the economy.
‘’We recognize that the development of a strong asset management sector is critical to creating investor confidence that boosts deepening of the capital markets. By putting in place a robust legal framework it will spur increased interest and participation by investors in Collective Investment Schemes’’, observed Mr. Shamiah.
Mr. Shamiah said; ‘’While CISs have traditionally offered avenue to retail investors with minimal investment capital to benefit from professional asset management, a need has emerged for sophisticated products such as pooled funds that are well managed and currently not available in the existing asset classes. There are also calls for greater flexibility and risk/investment strategy to determine portfolio allocation among asset classes’’.
The CMA Chief Executive added that as the market develops, there is need to review the eligibility and regulatory requirements for different regulated entities in the CIS ecosystem to ensure responsiveness to market dynamics including an emerging need for property developers to pool funds to support development projects such as affordable housing, which is aligned to the Government’s Big 4 Agenda.