Page 3 – Capital Markets Authority

22 November 2023

CMA Admits First Future Holdings Limited to the Regulatory Sandbox

Nairobi, 22 November 2023… In line with its commitment to deepen and develop the capital markets industry, by facilitating the deployment of financial technology (Fintech), the Capital Markets Authority (CMA) has announced the admission of First Future Holdings Limited (FFHL) to its Regulatory Sandbox.

First Future Holdings Ltd intends to test a USSD-based platform that simplifies CDS account opening and subsequent trading at the Nairobi Securities Exchange in partnership with Sterling Capital. In this regard, First Future Holdings will integrate the Immigration Population Registration System (IPRS) and the Kenya Revenue Authority (KRA) in its account opening USSD platform. When a customer accesses FFHL’s USSD code, they are prompted to key in their Identity Card number, email address, and agree to the terms and conditions. FFHL then utilizes the provided ID number to retrieve the necessary data from IPRS and the KRA Pin checker, ensuring the submission of verified and up-to-date information for CDS account opening.

In its capacity as an agent of Sterling Capital, FFHL electronically populates the required fields and submits electronic forms to Sterling Capital for account opening. Sterling Capital conducts their verification process before proceeding to open CDS accounts through the Central Depository and Settlement Corporation. Consequently, Sterling Capital under the agency relationship will execute orders placed by customers through the USSD code. FFHL will then collect orders electronically and pass them through to Sterling Capital. The firm will test the innovation in compliance with the provisions of the Capital Markets Regulatory Sandbox Policy Guidance Note.

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ABOUT THE CAPITAL MARKETS AUTHORITY

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, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

Nairobi cityscape - capital city of Kenya

20 November 2023

Communique of the 14th Retreat of the Joint Financial Sector Regulators Forum

lydia Press Release

The 14th Retreat of the Joint Financial Sector Regulators Forum (JFSRF) was held in Kwale County on November 17, 2023. The Forum was established in 2009 to collaborate on matters relevant to fostering overall financial sector stability and innovation to serve the people of Kenya.

The 14th Retreat took stock of progress made on the implementation of resolutions of the 13th Retreat that was held on December 16, 2022, in Kisumu County. The Retreat discussed emerging challenges, risks and opportunities as espoused in this year’s theme: Promoting stable, inclusive, resilient and sustainable financial sector in multi-shocks environment. The Retreat also hosted expert speakers on Climate Change opportunities and risks from the African Development Bank, Data Protection from the Office of Data Protection Commissioner, and Cybersecurity from the National Computer and Cybercrimes Coordination Committee (NC4).

The Retreat was hosted by the Central Bank of Kenya and chaired by the Retirement Benefits Authority. It was attended by Boards of Directors, Chief Executive Officers, and staff from the Capital Markets Authority (CMA), the Central Bank of Kenya (CBK), the Insurance Regulatory Authority (IRA), the Retirement Benefits Authority (RBA), and the Saccos Societies Regulatory Authority (SASRA). Also present were Boards, Chief Executive Officers, and staff from the Kenya Deposit Insurance Corporation (KDIC), and the Policyholders Compensation Fund (PCF).

The 14th Retreat of the JFSRF was held against the backdrop of a challenging global environment characterised by volatility in the financial markets, rising interest rates, elevated inflation pressures, high cost of living concerns, cyber risks, geopolitical developments that continue to disrupt supply chains, and climate change risks which are emerging as a key risk to the financial sector due to increased frequency and intensity of weather events such as drought, floods, and storms. Kenya’s financial sector, however, continues to position itself to mitigate these risks. This includes enhancing efficiency through technological transformation, efforts to green the financial sector, and continued reforms in the regulatory environment. Kenya’s financial sector remains stable and resilient to domestic and global shocks.
In recognition of these risks and the need to deploy appropriate policy mitigation measures, the 14 th Retreat of the JFSRF resolved that all member regulators:

Need to enhance financial sector stability assessment frameworks at institutional and sector-wide level for overall financial stability. This requires working with the National Treasury on the development of a robust macroprudential policy framework.
Need to develop a robust and comprehensive framework for climate risk analysis, Environmental, Social and Governance (ESG) reporting, and climate-related risk disclosures, as well as putting in place a Green Finance Taxonomy for the financial sector.
Will collaborate in the development of a national financial education strategy that would encompass financial literacy and awareness, in order to deepen financial inclusion and entrench consumer protection practices.
Will work towards enhancing integrity in the financial sector by addressing gaps identified during the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) mutual evaluation for Kenya and address any emerging issues on Anti-Money Laundering/Countering the Financing of Terrorism/Combating Proliferation Financing (AML/CFT/CPF), in compliance with the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA).
Will develop and adopt comprehensive facilitative frameworks for streamlining innovation, including virtual assets, to meet the needs of the general public and to support economic growth in recognition of the rapid adoption of technological innovations.

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Note to editors
The Financial Sector Regulators Forum (FSRF) was established in 2009 through a Memorandum of Understanding (MoU) to promote cooperation and collaboration in areas of mutual interest including but not limited to, information sharing,
collaboration and coordination on financial sector issues cutting across banking, insurance, saccos, capital markets and pension sectors. The Forum holds annual retreats to review issues touching on the country’s financial stability and to address emerging issues pertinent to the growth and stability of Kenya’s financial sector.

Communique of the 14th Retreat of the Joint Financial Sector Regulators Forum

7 November 2023

Request For Stakeholder And Public Feedback On The Draft Capital Markets (Conduct Of Business)(Market Intermediaries) Regulations, 2023

lydia Press Release

The Capital Markets Authority is charged with the mandate of regulating and developing Kenya’s capital markets. In line with the Statutory Instruments Act, Capital Markets Masterplan 2014 – 2023 and the
Strategic Plan, the Authority seeks to ensure that the capital markets legal and regulatory framework is up to date and responsive to changing market dynamics, technological advancements, and emerging stakeholder needs.
In this regard, the Authority has reviewed the Capital Markets (Conduct of Business) (Market Inter-mediaries) Regulations, 2011 in a bid to make them responsive to market needs and address new and emerging issues and has developed the draft Capital Markets (Conduct of Business) (Market Intermediaries) Regulations 2023.
In accordance with Section 12A (3) of the of the Capital Markets Act the Authority now invites stakeholders and the public to submit comments on the draft Regulations, available on www.cma.or.ke. Kindly submit
your comments by 8 December 2023 to:

FEEDBACK ON THE DRAFT CAPITAL MARKETS

6 November 2023

CMA licenses three new intermediaries

lydia Press Release

Nairobi, 6 November 2023…The Capital Markets Authority (CMA) has announced the issuance of licenses to Arvocap Asset Managers Limited and Myxeno Investment Management Limited to operate as fund managers after meeting the requirements of the Capital Markets Act and Regulations. Furthermore, the Authority has also licensed Kingdom Securities Limited to operate as an authorised securities dealer.

A fund manager is a manager of a collective investment scheme, registered venture capital company or an investment adviser who manages a portfolio of securities in excess of an amount prescribed by the Authority. Consequently, an authorised securities dealer means a person authorized to deal in securities and operate in a specific market segment as may be prescribed by the Authority.

Commenting on the new licenses, the CMA Chief Executive Officer Mr. Wyckliffe Shamiah observed, ‘‘the willingness of new market players to come under regulatory supervision provides confidence to investors and constitutes a critical function that we carry out to ensure that the conduct of licensees is aligned to our regulatory framework and international standards. The outcome is that we can at least ensure the markets are fair, orderly, and efficient.’’

The licenses will remain in place perpetually unless revoked at the request of either the firm or by the Authority. Furthermore, the licensees’ customer-facing staff will be required to undertake the Securities Industry Certification Programme (SICP) within a year from the date of licensing. The new licenses bring the number of fund managers to 40 and that of authorised securities dealers to four.

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BACKGROUND INFORMATION

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. CMA also regulates the commodity markets and online forex trading. 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, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

17 October 2023

CMA issues coffee broker license to Kirinyaga Slopes Coffee Brokerage Company Limited

brenda Press Release

Nairobi, 17 October 2023…As part of its efforts to deepen coffee sub-sector reforms, the Capital Markets Authority (CMA) has licensed Kirinyaga Slopes Coffee Brokerage Company Limited as a coffee broker. The company’s promoter is the Kirinyaga County Cooperative Union which comprises of 14 cooperative societies. This brings the number of licensed coffee brokers to 14.

The other licensed coffee brokers are; Meru County Coffee Marketing Agency Limited; Kipkelion Brokerage Company Limited; Murang’a County Coffee Dealers Limited; United Eastern Kenya Coffee Marketing Company Limited; Mt. Elgon Coffee Marketing Agency; Embu Coffee Farmers Marketing Agency Limited; Kinya Coffee Marketing Agency Limited; Alliance Berries Limited; Bungoma Union Marketing Agency Limited; New Kenya Planters Co-operative Union PLC (New KPCU); KCCE Marketing Agency Limited; Meru South Coffee Marketing Company Limited; and Baringo Kawa Brokerage Company Limited.

The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, observed, “the momentum of the reform agenda needs to be sustained to ensure full implementation of the Capital Markets (Coffee Exchange) Regulations. This is expected to ensure the marketing and trading mechanism at the Nairobi Coffee Exchange promotes fair trade, is transparent and enhances price discovery, ultimately benefitting the coffee farmers.’’

The Capital Markets Act was reviewed in 2016 to expressly provide CMA the mandate to regulate spot commodity markets including the coffee commodity market in Kenya. CMA regulates the structured spot commodity markets and in particular, the coffee commodity market according to Section 11(3) of the Capital Markets Act.

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

17 October 2023

East African Securities Regulators Call for Full Representation from All EAC Countries

brenda Press Release

Kampala, Uganda: The regional capital markets regulators, operating under the esteemed banner of the East African Securities Regulatory Authorities (EASRA), convened during their Consultative Committee meeting at the Royal Suites Bugolobi, Kampala, from the 11th to 13th of October 2023. This gathering marked the 52^nd Consultative regional meeting represented by Uganda, Kenya, Rwanda, and Tanzania.

The consultative meeting, and the respective countries’ capital markets focused on a myriad of critical topics and initiatives aimed at strengthening EASRA. It emphasized the inclusion of more East African member states into the organization, with particular reference to the Democratic Republic of Congo (DRC) and South Sudan.

Notable attendees included Keith Kalyegira, CEO of Capital Markets Authority (CMA) Uganda; Wycliffe Shamiah, the CEO of CMA Kenya; CPA Nicodemus D. Mkama, CEO of Capital Markets and Securities Authority (CMSA) Tanzania; and CMA Rwanda, represented by Carine Twiringiyimana.

Subcommittees from various East African countries, comprising Market Development, Market Supervision, and Legal Affairs, engaged in extensive discussions on various pivotal subjects. These included regulatory sandboxes, ESG (Environmental, Social, and Governance), Private Equity & Venture Capital regulations, Crowdfunding, and Islamic financing, with a special emphasis on Small and Medium-sized Enterprise (SME) financing.

Keith Kalyegira, the current Chairman of EASRA, reinforced the collective ambition of EASRA, stating, “We will extend a formal invitation to DRC and South Sudan to join EASRA, solidifying regional and country roadmaps to further bolster East Africa’s capital markets industry.”

‘It was agreed that another EASRA Strategic Plan with a vision: to foster the development of an integrated East African capital market be developed. This is to be achieved through advocacy, innovation, capacity building, harmonisation of regulations and laws, and knowledge sharing, ultimately positioning the EAC capital market as a respected platform for mobilizing long-term capital for economic development. The Strategic Plan will also serve as a roadmap for EASRA members in the region,’ he added.

EASRA members noted the progress Burundi has made in the establishment of their capital markets.

Recognizing the significance of green finance, EASRA reaffirmed their commitment to adopting the ISSB (International Sustainability Standards Board) standards, S1 and S2. Wycliffe Shamiah, the CEO of CMA Kenya called upon EASRA members to collaborate with accounting professionals and standard setting bodies in the members’ respective countries to harmonize and promote these standards, concurrently embarking on conducting awareness and sensitization campaigns.

Emphasizing the critical role of SME financing in fostering market growth, EASRA members committed to the continual development and harmonization of the regulatory framework, thereby facilitating the expansion of capital markets across the East African Community (EAC), with particular emphasis on crowdfunding regulations.

The CEO of CMSA Tanzania highlighted the role of robust legal frameworks in supporting SMEs and the evident improvements in this sector. He also expressed the need for harmonized regulations in Islamic financing and crowdfunding, emphasizing the utilization of country-specific legal frameworks to address challenges conclusively.

CMA Rwanda highlighted the Collective Investment Schemes (CIS) legal framework which caters for CIS formations under different types such as; Partnerships, Companies, Trusts and contractual schemes provisions hence strengthening the available pool of savings for deploying into the economy.

The gathering underlined the necessity of cross-border information sharing to facilitate enforcement actions in line with the information sharing emphasized for members of the International Organization of Securities Commissions (IOSCO) multilateral memorandum of understanding (MMOU).

In closing, the Consultative Committee underscored the collective responsibility of EASRA members in the development of EAC Capital Markets, with a firm commitment to harmonize legal and regulatory frameworks in order to ease capital raising and investing across the region.

NOTES TO THE EDITOR

Capital Markets Authority (CMA)-Kenya, Capital Markets Authority (CMA)-Uganda and Capital Markets and Securities Authority (CMSA)-Tanzania entered into a Memorandum of Understanding (MoU) and adopted a common blue print on the integration of the East African Capital Markets in 1997. This MoU formed the basis for the establishment of the East African Securities Regulatory Authorities (EASRA). The Capital Markets Authority (CMA)-Rwanda later joined EASRA in 2009, and the Bank of the Republic of Burundi (BRB) in 2011. EASRA continues to operate as a consultative institutional forum where the regulatory authorities discuss matters of mutual interest that affect their operations.

The main objectives of EASRA are Information sharing among the members; mutual assistance and cooperation between members; and advancing the integration of the East African capital markets. Under the memorandum signed by the regulators, EASRA is mandated to: Develop common capital market strategies; Harmonize capital market laws and structures; Foster regional capital markets development; Facilitate cross-border investments; Develop market infrastructure; Develop policy proposals for capital markets incentives; Develop proposals for the alleviation of impediments; and Develop a common/ similar trading system(s).

3 October 2023

CMA to participate in World Investor Week 2023

brenda Press Release

Nairobi 03 October 2023..…The Capital Markets Authority (CMA) has announced its participation in the World Investor Week (WIW) 2023 taking place from 2 to 8 October 2023 to enhance investor awareness and protection. During the week, CMA has organized an Islamic finance workshop, 4 to 5 October 2023, to deepen understanding of the opportunities and principles around Islamic finance products.
The seventh edition of the week-long WIW campaign is an initiative of the International Organization of Securities Commissions (IOSCO), the global standard setting body of capital markets regulators. The global outreach by capital markets regulators and related institutions seeks to raise awareness of the importance of investor education and protection and to highlight the various initiatives of securities regulators in these two critical areas.

The key messages of the WIW campaign in 2023 will focus on Investor Resilience, Crypto Assets and Sustainable Finance. Other themes cover frauds and scams prevention, basics of investing, technology and digital finance.

During the WIW 2023, CMA is also running radio campaigns to enhance investor awareness of capital market products.

The CMA Chief Executive, Mr. Wyckliffe Shamiah observed, “the Authority has continued to implement robust awareness and investor protection strategies and will continue supporting the Government’s Bottom-up Economic Transformation Agenda (BETA) by positioning the capital markets as a source of long-term funding to support various projects and initiatives”.

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BACKGROUND INFORMATION ON THE CAPITAL MARKETS AUTHORITY

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 Capital Markets Authority, Manager Corporate Affairs and International Relations, Antony Mwangi on amwangi@cma.or.ke

2 October 2023

Capital Markets Authority Greenlights Kenya’s Inaugural Sukuk Bond

brenda Press Release

Nairobi, 20 September 2023… In a groundbreaking development for Kenya’s capital markets landscape,
the Capital Markets Authority (CMA) has granted approval for the issuance of the country’s first-ever Sukuk
Bond (“Sukuk”). Linzi Finco Trust, the Issuer of this pioneering Sukuk, named Linzi Sukuk that offers an
internal return of return at 11.13%, is set to raise KSh. 3 billion with the primary aim of developing 3,069
institutional housing units, in alignment with the Government’s ambitious Transformative Agenda.
Sukuk, also known as Islamic bonds, are financial instruments that comply with the Shari’ah principles,
making them a unique and inclusive investment avenue. This momentous approval by the CMA marks a
significant milestone in Kenya’s capital market diversification, providing both investors with an alternative,
socially responsible investment opportunity.
The issuance of the Linzi Sukuk bond underscores Kenya’s commitment to addressing the pressing need
for affordable housing through the provision of affordable financing, a pivotal component of the
Government’s transformative agenda. The Housing demand in Kenya is estimated at 250,000 units
annually. With a supply of only 50,000 new houses annually, there is an 80 per cent annual housing deficit.
The Government has a plan to deliver 200,000 housing units annually through collaboration between the
national government, counties and the private sector. To this end, there has been at least three projects
launched in the past three months, with 7,800 units in the offing.
This landmark Sukuk will contribute significantly to expanding the availability of affordable housing and
positively impact the lives of many Kenyan citizens. This innovative financing mechanism is expected to
attract both domestic and international investors seeking ethical and socially responsible investment
options.
The CEO, Mr. Wyckliffe Shamiah stated, “We are thrilled to embark on this pioneering journey with the
issuance of the first Sukuk bond. This financial initiative represents not only a new investment opportunity
but also a significant step towards addressing the housing deficit in Kenya and supporting the
Government’s transformative agenda.”
The Sukuk bond issuance is anticipated to set a precedent for further innovative capital markets
instruments in Kenya, demonstrating the Authority’s commitment to economic growth and development.
It also signifies CMA’s dedication to fostering an inclusive and diverse capital markets market that caters
to a broader spectrum of investors.
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BACKGROUND 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. CMA also regulates the structured commodity markets and online forex trading. 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, Manager Corporate Affairs &
International Relations on amwangi@cma.or.ke

26 September 2023

CMA Directs Online Foreign Exchange Brokers to Enhance Disclosure Mechanisms

brenda Press Release

Nairobi, 21 September 2023… The Capital Markets Authority (CMA) released new guidelines directing online foreign exchange brokers to enhance disclosure mechanisms, promote transparency and ensure investor protection. To mitigate the risks and losses associated with participating in Contract for Differences (CFDs), the CMA is working with the licensed forex brokers to ensure there are appropriate disclosures and rollout of a comprehensive investor education programme.

CMA is working with licensed brokerage community and other stakeholders to develop standards to protect consumers by ensuring integrity in CFD products to deliver satisfactory outcomes for all stakeholders. A CFD is a contract between a buyer and a seller that stipulates that the buyer must pay the seller the difference between the current value of an asset and its value at contract time. CFDs allow traders and investors an opportunity to profit from price movement without owning the underlying assets. The value of a CFD does not consider the asset’s underlying value, only the price change between the trade entry and exit.
The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, said “in an effort to foster and deepen growth in the online forex trading industry, CMA has facilitated setting up of a Technical Working Group comprising of the licensed online foreign trading brokers as well as other stakeholders including peer regulators to assess the state of the market and propose recommendations to mitigate the challenges faced by investors, traders and licensed players”.
The CMA Chief Executive added that continued collaboration with peer regulators including the Central Bank of Kenya, the Communications Authority and the Financial Reporting Centre among others is key to protect Kenyans from unlicensed online foreign exchange brokers. CMA has so far licensed nine (9) non-dealing online foreign exchange brokers and two (2) money managers. The non-dealing online foreign exchange brokers are EGM Securities Limited (Trading as “FX Pesa”); SCFM Limited (Trading as “Scope Markets”); Pepperstone Markets Kenya Limited; Exinity Capital East Africa Limited; HFM Investments Limited (Trading as “HF Markets”); Windsor Markets Kenya Limited; Tadenex Limited (Trading as Exness); Ingot Africa Limited; Admirals KE Limited. The money managers are Standard Investment Bank (Trading as “MANSA X”) and Trade Sense Limited.

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BACKGROUND 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. CMA also regulates the commodity markets and online forex trading. 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, Manager Corporate Affairs & International Relations on amwangi@cma.or.ke

15 September 2023

Over 1,000 brokers certified in two years

brenda Press Release

The number of certified stockbrokerage staff has risen to over 1,000 in the last two years following the introduction of a securities and investment certification programme by the Capital Markets Authority (CMA). .. Click the Link below for more..