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    A quarterly publication of the Capital Markets Authority

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    A proactive regulator of competitive and robust capital markets

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    Developing Kenya's capital markets to be an investment destination of choice through facilitative regulation and innovation.

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    Establishing a robust, facilitative policy, legal and regulatory framework for capital markets development

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    Promoting investor education, awareness and interest in the capital markets

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    Strengthening institutional capacity to effectively and efficiently deliver on its mandate


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.


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

Principal Secretary to the National Treasury,

Chairman and Board of the Capital Markets Authority;

Capital Markets leaders and stakeholders,

Distinguished Invited Guests

Ladies and Gentlemen:

It is my pleasure to join you this evening to preside over this important occasion of celebrating a shared achievement as stakeholders in capital markets. Taking into account that Kenya is neither the largest economy on the continent, nor the one with the most developed capital markets, it is particularly rewarding to have our capital markets regulator, and by extension our industry as a whole, recognized as being the most innovative on the continent.

Ladies and Gentlemen, allow me at this time to congratulate the Board and management of the Capital Markets Authority for this exemplary achievement. Having worked closely with the Authority, I am quite aware of the dedication and work that has gone into this achievement. I wish to encourage you to continue with that spirit of hard work and selflessness.  

I recognize that this achievement was as a result of the collaborative efforts between the Authority and the capital markets stakeholders. In this regard, I join the Authority in thanking all stakeholders for the support you have continued to provide the Authority as it walks along this challenging road of creating a conducive environment for capital markets growth. I am informed that you have just had very fruitful brainstorming session and I am confident that the outcomes of that sessionwill inform critical interventions that are required to maintain positive growth of our markets.

As you continue striving to upscale our capital markets, you can rest assured of the National Treasury’s support and facilitation. Allow me to once again recognize this sector for the development of a 10 year Master Plan which I gladly launched last year and note has stimulated a great deal of positive development.

The development of Capital Markets Master plan came at a time when the Government was launching the second Medium Term Plan for implementing the Vision 2030. Implementation of the Plan was further bolstered early this year when I gazetted the Capital Markets Master Plan National Steering Committee to oversee the implementation of the Master Plan. As the National Steering Committee, we shall be holding our inaugural meeting towards the end of this month to receive a substantive progress report and identify and address critical issues that are pertinent to the implementation of the Master Plan.

Ladies and Gentlemen, we all know that one of our key objectives is to make Nairobi an International Financial Centre (IFC). Recognition of Kenya’s capital markets regulator is a major boost to this aspiration. The National Treasury will ensure that the Nairobi IFC Authority leverages on this key achievement by the Capital Markets Authority. Our ultimate goal is to make Nairobi the financial hub of the region. Experience from other International Financial centers indicates that capital markets plays a very critical role in defining an international financial Centre. In this regard the National Treasury will continue working together with CMA to ensure improved ranking of our Exchanges as well as increase in available products in our markets. In this regard, I am very pleased to hear that Kenya has now moved to the next level of market maturity with the introduction of a licensed Derivatives Exchange to be run by the Nairobi Securities Exchange.

The National Treasury supported the demutualization of the Nairobi Securities Exchange and can see that reform in governance and operations is clearly bearing fruit. Allow me to congratulate the Nairobi Securities Exchange for the positive step they made in reducing the admission fee tenfold. I urge them to continue reducing these markets costs so that we can have as many players in our market as possible. In order to support greater vibrancy in market activity, during this year’s Budget speech, I removed foreign ownership limits for listed companies as a way attracting and encouraging foreign investment and promoting greater liquidity for domestic investors.

Ladies and Gentlemen, while appreciating the role of CMA in making Nairobi an International financial Centre, please remember the scale of the challenge in front of you as a sector. I urge you all to continuously remember the role capital markets play in the overall growth of an economy by way of resource mobilization. As we strive to maintain our annual growth level of 10% with high savings levels, the capital markets have the cardinal role of facilitating mobilization and allocation of long term savings and investments. The National Treasury will therefore continue supporting the sector through engagement with other arms of the government in ensuring the right legal and regulatory framework and environment exists within the capital markets space.

Ladies and Gentlemen, I would like to assure those present that in line with our Vision 2030 objectives, the Government will continue to critically assess the balance between external debt and the domestic debt markets to finance national development projects. Where possible we will seek to finance government programs using domestic debt which is often cheaper than foreign debt in the long term. This is however only viable in an environment where the domestic debt market is vibrant and liquid. It is for this reason that we as National Treasury support all initiatives aimed at developing both government and corporate bond issues since an increased supply of instruments translates to competition and overall efficiency in the market.

You may be aware that I officiated the launch of the M-Akiba product 2 weeks ago. This savings vehicle which targets the retail investor is expected to not only mobilize government funding from the retail investors but will also help in lowering the borrowing costs of government debt in the medium to long term while supporting financial inclusion and the effective allocation of national savings.

One of the National Treasury’s objectives in managing its debt as well as generally boosting inward savings is to support any measure that aims at attracting the attention of the Kenyans in the diaspora. You may be aware that the Ministry of Foreign Affairs spearheaded the development of National Diaspora Policy that was launched early in January this year. The National Treasury will work together the Ministry of Foreign and other stakeholders to ensure that we maximize on diaspora remittances.

Ladies and Gentlemen, as we focus on tapping the diaspora remittances, we should not lose sight of maximizing the potential funding that can be mobilized from the gulf region and our brothers and sisters who profess the Muslim faith. In this context I have previously hinted that the government will be exploring issuing a Sukuk and I look forward to a number of Islamic financial markets conferences and projects that will be commencing in this and the next quarter. We appreciate that most of the traditional capital markets products do not meet the Shariah standards. I therefore glad to note that Capital Markets Authority, in conjunction with all the financial sector regulators, is already working on various initiatives to develop institutionalize competitive Shariah compliant financial markets in Kenya. At the National Treasury, we shall work with various national leaders to establish a National Shariah Supervisory Council that can be used to set standards and good practices for shariah compliant products in the country.

As I conclude, I wish to observe that with all our efforts on product development and innovation without good corporate governance, we shall not attract investors into the capital markets. My office will therefore continue working with the Authority to ensure that there is a robust corporate governance regulatory framework in place that can bring our integrity to international standards.

Finally, allow me to once again congratulate the Board and Staff of the Capital Markets Authority for this Innovation Award and commend the industry as a whole for driving progressive growth.

I wish you all fruitful engagements during this cocktail.


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.


Cabinet Secretary to the National Treasury, Mr. Henry Rotich;
Principal Secretary to the National Treasury, Dr. Kamau Thugge
Capital Markets Authority Board members;
Distinguished panelists and invited guests;
Ladies and Gentlemen:
It gives me great pleasure to extend to you all, on behalf of Capital Markets Authority, our deepest appreciation for joining us for this stakeholder engagement and cocktail event. I wish to take this opportunity to thank you for finding time out of your busy schedules to deliberate on key issues as well as joining us to celebrate together as an industry. Very much in line with the excellent support that we have been receiving from the National Treasury I am also honoured to recognize the presence of the Principal Secretary Dr. Kamau Thugge and the Cabinet Secretary of the National Treasury, Mr. Henry Rotich for gracing this occasion cognizant of your various commitments.

Ladies and Gentlemen; from the just concluded brainstorming engagement, it is quite evident that our industry is destined to take capital markets to the next level with our joint commitment to continuously working towards creating a vibrant and globally competitive financial sector that will promote a high level of savings to finance our nation’s investment needs. To further echo the sentiments of my esteemed Chair of the Authority’s Technical and Policy Committee, Ms. Rose Detho, today is really a celebration of the actual capital markets “soldiers” or “mashujaa” on the ground which is all of you, as the Authority merely plays the role of a facilitator.

Ladies and Gentlemen; The CMA’s recognition as being the most innovative capital markets regulator in Africa is a great milestone. The award series which is Pan African in scope, also recognizes the best performing stock exchanges, listed companies, investment banks, research teams, regulators, socially responsible companies, and sovereign wealth and pension fund investors. For the Authority to come out at the top is a testament to our industry’s collaborative efforts. I seem to recall that the Securities and Exchange Commission of Nigeria has won the award over the last four years so this award announces the arrival of Kenya on the continental stage. As a Board, we are all the more encouraged by this particular award given we set out the Authority’s Mission in our Strategic Plan 2013-17 as being to “promote the development of Kenya’s capital market to be an investment destination of choice through facilitative regulation and innovation.

That said, Ladies and Gentlemen, I applaud the Government, more specifically, the National Treasury, for supporting the developments of the various products and initiatives in the capital markets. In this regard, it is no surprise that Kenya is quickly progressing out of the “frontier” economy classification and closing the gap on “emerging market” economies. This has largely been attributed to the commitment by stakeholders and also the Government towards facilitating transformative policies and structural reforms.

This Innovation award was no doubt precipitated by a long line of previous support initiatives from the Government. Most recently, with the last Budget statement we saw further initiatives to stimulate the capital markets in Kenya. These included the creation of a new category in the Retirement Benefits Investment guidelines to allow schemes to invest up to 10 percent of their assets in private equity funds and venture capital funds and the removal of the 75% cap on foreign share ownership to stimulate Foreign Direct Investment (FDI) as examples.
In addition we applaud the Government for supporting measures introduced through the Finance Act 2015, which was assented to by the President on September 11, 2015, such as the removal of Capital Gains Tax (CGT), the introduction of reduced tax rates for companies introducing shares through listing by introduction on any securities exchange as well as the removal of stamp duty on the transfer of real estate into a Real Estate Investment Trust (REIT).
Ladies and Gentlemen; in this context, allow me to highlight some of the more recent developments in the capital markets that have been achieved with the support from you, the industry, as well as the Government:

The Authority recently granted approval to the first Income Real Estate Investment Trust Scheme (REIT) in Kenya to raise up to Kshs12.5 billion. The boom in Kenya’s real estate market will in no doubt facilitate the projected increased uptake of REITS.

The Technical and Policy Committee of the Board received extensive presentations from the NSE in respect of their Derivatives Exchange license on Friday the 16th and the Authority is now finally in a position to grant a license to the NSE to conduct derivatives business and to commence and aggressive public awareness campaign to deepen capacity and understanding of the new opportunities and risks associated with derivatives contracts and markets;

As a follow up to an MoU signed with the Charted Institute for Securities and Investment (CISI) to offer certification for capital markets practitioners in Kenya, I am pleased to report that the first component which is the international entry standard module has been completed and training sessions are set to begin within the next two months or less with the first certification exams expected in the first quarter of 2016.

The completion of the Corporate Governance framework review for Kenya which was complemented by the recent exposure of the Stewardship Code’s which empowers institutional investors to play a more proactive role in tracking and pressuring listed companies to improve their compliance with the standards in the Corporate Governance Code. In this context, we are proud to note that the corporate governance code for public listed companies finalized in August 2014 was a significant reference document for the design of the Mwongozo Code for State Corporations;

Last but not least, the increasing reach of our investor education initiatives which I have witnessed firsthand during the Capital Markets Open Day held in May as well as the County initiatives in Mombasa. I note with delight that today marks the beginning of the Capital Markets University Challenge for the County of Nairobi bringing together 19 universities in a competition which will serve to create greater awareness among the youth.

Ladies and gentlemen; as we celebrate how far we have come, I am pleased to note that innovation is being supported with the promotion of competition and the strengthening of market oversight. I am glad to note we have witnessed a tenfold reduction in NSE membership admission cost from Kshs 250 million to Kshs 25 million to reduce barriers to market access for new players seeking to be trading participants. The Authority also continues to strengthen measures to maintain financial market stability in Kenya through implementation of Risk Based Supervision (RBS) and the continuous assessment of liquid capital adequacy based on the nature and scale of the business conducted by regulated entities.

I will stop at these for today but encourage you to continue following all these important initiatives as they happen and to be part of their full realization

Ladies and Gentlemen; as I conclude, I wish to recognize the various industry working groups under the Capital Markets Master Plan as well as the Implementation Committee members, some of whom are represented here today for their committed efforts to secure the proper implementation of the Capital Markets 10 year Master Plan. As they prepare to report on that progress to the inaugural National Steering Committee later this month, it gives me great pleasure to welcome the Chair of that Steering Committee, the Cabinet Secretary to address us here today.

I wish you a blessed Mashujaa day tomorrow.

Karibu Bwana Rotich

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