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CMA Issues Final Policy Guidance Note on Exchange Traded Funds

CMA Issues Final Policy Guidance Note on Exchange Traded Funds

Nairobi October 01, 2015…In its drive to widen the universe of available capital markets products in the Kenyan market, the Capital Markets Authority (CMA) has published the final Policy Guidance Note (PGN) that will facilitate the introduction of Exchange Traded Funds (ETFs) in Kenya.

The PGN, which was first approved by the CMA Board in December 2014, has undergone extensive stakeholder consultation and engagement to ensure that the final product has the input of industry stakeholders. It also underwent a 30-day public exposure period in August 2015 to give an opportunity to stakeholders for further input and feedback.

The CMA Acting Chief Executive, Mr. Paul Muthaura, disclosed that the principle based approval approach, which underpins the PGN, empowers the Authority to fast-track roll-out of new products and services in capital markets. This shall ensure that the market is more diverse in terms of the portfolio of investable products, supported by a timely response to the changing capital market dynamics.

The principles-based approval approach is in line with recent amendments to the Capital Markets Act, Cap 485A Laws of Kenya, effected in December 2013 that enhanced CMA’s role in facilitating market development in relation to the introduction of new products.

Mr. Muthaura noted, ‘’The principle-based approach is a means of regulation whereby the law does not set out specific/prescriptive rules on what a market player can or cannot do but rather sets out broad but well-defined principles that businesses are expected to follow. This is more flexible and promotes innovation”.

He explained that the new approach is designed to accelerate the strategies to increase the scope of available capital market products in Kenya’s capital markets, the first being ETFs. The PGN on ETFs was developed by CMA, in close consultation with industry stakeholders.

The publication by CMA paves the way for the licensing and approval of ETF stakeholders such as ETF promoters and market makers, leading to the eventual ETFs trading on the Nairobi Securities Exchange. This is expected to happen pending the development of a comprehensive Regulatory Framework to guide the operations of the new market sub-segment.

Mr. Muthaura explained that the Authority will be using the same approach of principle-based approval to introduce other new products with a view to catalyzing the transformation of Kenya into a capital markets hub as envisaged in the 10-year Capital Market Master Plan. The PGN is available on the CMA website at www.cma.or.ke

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NOTES TO EDITORS:

Exchange Traded Funds (ETFs)

An ETF is a type of listed open-ended index/unit instrument bought or sold on a securities exchange. The index or unit may be composed of ordinary stocks, bonds, commodities, futures or a combination of real assets with the objective of allowing for exposure to a portfolio of securities, assets or indices whose price movement is in tandem with the price movement of the constituent underlying securities or commodities. An ETF can be a domestic or offshore product.

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. 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 further information contact; Antony Mwangi, Head of Corporate Communications, on Tel: 0722825227 and Email: amwangi@cma.or.ke
Antony Mwangi, MPRSK

Nairobi cityscape - capital city of Kenya

CMA gears up for setting up of derivatives exchange in Kenya

Nairobi September 30, 2015…As part of its efforts to prepare for the planned launch of a derivatives exchange in Kenya, the Capital Markets Authority (CMA) has organized a capacity building programme for the capital markets industry with the assistance of an expert from the Dubai Financial Services Authority.

While confirming the progress made, CMA Acting Chief Executive, Mr Paul Muthaura, said “the establishment of a vibrant derivatives markets in Kenya is one of the key projects under the Capital Market Master Plan (CMMP) whose delivery is key to deepening the capital market in Kenya’’.

The capacity-building initiative is part of a broader strategy of preparing the market participants for the planned establishment of derivatives exchanges in Kenya in order to diversify the products available in the capital markets as envisaged in the CMMP.

As part of the preparatory work, Mr Muthaura, explained that the regulatory framework is already in place having undergone extensive peer review by other regulators to ensure it is aligned to global market best practice. The key objectives of the workshop are: to outline the key milestones in operationalizing the derivatives market; to update stakeholders on the risk management framework for derivatives in Kenya and to learn from global experience with respect to key ingredients for risk based supervision in a derivatives market; modalities for international cooperation by regulators and exchanges on derivatives market supervision and enforcement and emerging trends and principles relating to commodity derivatives

The CMA Acting Chief Executive explained, “Kenya’s regulatory framework on derivatives has been aligned to the International Organization of Securities Commissions (IOSCO) Principles and nonetheless takes into account Kenya’s status as a developing economy. The establishment of a derivatives market is expected to attract both domestic and foreign participation and to benefit all sectors of the economy through, among others, providing products to address volatility in interest rates, currency and, in the longer term, volatility in prices of commodities’’.

Nairobi cityscape - capital city of Kenya

Capital markets industry commits to closer engagement with the CMA in strengthening the legal and regulatory framework for sustainable market development

Nairobi December 16, 2014…..The capital markets industry committed to work in tandem with the Authority to continue the significant progress made to date in ensuring the legal and regulatory framework is more responsive and facilitative to the emergence of Kenya as the heart of capital markets investment on the continent. These resolutions were reached at a stakeholders’ forum on the findings of a recent Regulatory Impact Assessment of the capital markets laws on market development.

The concerted efforts between the Authority and the industry participant including issuers, investors and professional advisors will focus on among other areas: more effective ways of communication and access to the regulatory framework, particularly through leverage of ICT; more effective identification of the spectrum of activities which should fall within the Authority’s regulatory ambit; support for the harmonization of regulatory and operation costs of listing and issuance in the region, streamlining of trading and settling of cross listed securities; accelerated enactment of pending capital markets laws; and building awareness of the opportunities from issuing in the public markets through improved corporate governance compliance. Stakeholders reiterated their willingness to identify more effective options of engagements to better incorporate their views and enhance awareness of newly enacted laws.

Speaking during the forum, the Capital Markets Authority (CMA) Acting Chief Executive, Mr. Paul Muthaura, emphasized that the Capital Markets 10 Year Master Plan has devoted a Pillar specifically aligned to articulating the critical importance of a sound, responsive legal and regulatory framework that inspires confidence by strengthening and streamlining regulation as well as ensuring coherence in regulation as the best means to promote market development. In this context, the industry Master Plan affirms the need for continuous review and strengthening of corporate governance and financial reporting standards and frameworks. “The Pillar identifies the challenge of regulators globally of having the dual role of development and regulation, and re-enforces that the responsibility for innovation and development of products and markets must lie with market participants themselves, being those best equipped to identify viable opportunities for new products, based on demand, in collaboration with other market participants”, Mr. Muthaura noted.

Mr. Muthaura added “the Authority, in its endeavour to balance its regulatory and developmental mandate supports a regulatory framework based on the core objectives of protecting investors, maintaining orderly markets and supporting financial stability. This spirit has informed the introduction of an in-principle approval framework and informed a raft of new provisions in the Capital Markets Amendment Act, 2013 to facilitate greater regulatory flexibility for the introduction of appropriate products to fund the Vision 2030.

Mr. Muthaura observed that for the effective attainment of this approach to innovation, there is need to relook at some existing primary legislations that may hinder the introduction of a responsive legal and regulatory environment notably the Statutory Instruments Act.


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BACKROUND 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. 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, contact Antony Mwangi on amwangi@cma.or.ke or 0722825227.

Kind Regards,

cma-fire

Public, Private Sector Urged to Disclose Non-financial Information in their Reports.  

Nairobi, 29 August 2023…The public and private sectors in the country have been urged by promoters of the Financial Reporting (FiRe) Award to embrace disclosure of non-financial information as it plays a key role in business sustainability.

The disclosure of non-financial information is essential for building trust amongst the public by responding to their expectations and needs and by communicating with external stakeholders, including investors, on the need for sound decision making.

The coveted FiRe Award is organized by five promoters namely Institute of Certified Public Accountants of Kenya (ICPAK), the Public Sector Accounting Standards Board (PSASB), Nairobi Securities Exchange (NSE), Capital Markets Authority (CMA) and the Retirement Benefits Authority (RBA).

This year’s FiRe Award theme is “utilizing technology and innovation to enhance transparency of sustainability, governance and financial information.” The theme resonates with the critical role that technology plays in ensuring transparency of non-financial information disclosures, which give a wholesome view of organizational performance and its relevance in decision-making.

Speaking during the launch of the 22nd Edition of the FiRe Award, the Chairman of the FiRe Award Executive Committee, who is also the NSE CEO, Mr. Geoffrey Odundo, said that FiRe Award promotes financial reporting excellence, fosters sound corporate governance practices, and enhances corporate investment and environmental reporting in public and private sectors.

The CEO of Public Sector Accounting Standards Board (PSASB), Mr. Fredrick Riaga, said that as the demand for non-financial information disclosure increases, data collection and metrics development become a challenge. To surmount this, public sector entities should leverage on technology to enhance transparency and sustainability in financial reporting. “Even as PSASB and the National Treasury are making final touches on modalities of transitioning the country from cash to accrual accounting, public sector entities should strike a balance in reporting financial and non-financial information,” Mr. Riaga said.

ICPAK Chief Executive Officer, CPA Dr. Grace Kamau, added that the FiRe Award has recognized and awarded the best reporting entities in East Africa. The Award aims to promote integrated reporting by enhancing accountability, transparency, and integrity in compliance with appropriate financial reporting framework and other disclosures on governance, social and environmental reporting by private, public and other entities domiciled in East Africa.”

 “The disclosure of non-financial reporting will address the growing expectation from stakeholders on transparency and accountability. The changing market dynamics calls for disclosure on long term value creation and future trends. The disclosure of non-financial information will restore trust in business, reinforce the stability and predictability of business performance,” RBA Chief Executive, Mr. Charles Machira observed.

The CMA Chief Executive Officer, Mr. Wyckliffe Shamiah, noted that ‘’the adoption of a wholistic approach to financial reporting to include disclosure of non-financial information is critical due to the growing concerns around governance practices, business sustainability and the contribution of corporate activity to climate change.”

Mr. Shamiah also welcomed the publication of the final standards for Sustainability-Related Financial Information (IFRS S1) and Climate-Related (IFRS S2) Disclosures by the International Sustainability Standards Board.

BACKGROUND INFORMATION ON THE FIRE AWARD

The Financial Reporting (FiRe) Award is the most prestigious and coveted Award in East Africa for financial reporting. The Award is presented annually, during a colourful, gala evening hosted by the joint promoters – the Public Sector Accounting Standards Board (PSASB), Capital Markets Authority (CMA), the Nairobi Securities Exchange (NSE) and the Institute of Certified Public Accountants of Kenya (ICPAK). The FiRe Award has been recognized and awarded the best reporting entities in East Africa. The Award aims to promote integrated reporting by enhancing accountability, transparency, and integrity in compliance with appropriate financial reporting framework and other disclosures on governance, social and environmental reporting by private, public and other entities domiciled in East Africa. Visit the website: http://www.fireaward.org

BACKGROUND INFORMATION – ABOUT THE PROMOTERS

INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF KENYA: The Institute of Certified Public Accountants of Kenya (ICPAK) is a statutory body that regulates the profession of accountancy in Kenya. The Institute of Certified Public Accountants of Kenya (ICPAK) is a statutory body of accountants established under by the Accountants Act of 1978, and as repealed under the Accountants Act Number 15 of 2008, mandated to develop and regulate the Accountancy Profession in Kenya. It is also a member of the International Federation of Accountants (IFAC), the global umbrella body for the accountancy profession. For more information, please contact: Mercelline Maroma, Head of PR and Corporate Communications on Email: mercelline.maroma@icpak.com

PUBLIC SECTOR ACCOUNTING STANDARDS BOARD: The Public Sector Accounting Standards Board (PSASB) was established under sections 192 to 195 of the Public Finance Management (PFM) Act 2012. The Board is mandated to provide frameworks and set generally accepted accounting standards for the development and management of accounting and financial systems and internal audit procedures by state organs and public entities as spelt out under Section 194 of the PFM Act. For more information, please contact: Benuel Bosire, Head of Public Relations and Communications on Email: benuel.bosire@psasb.go.ke

NAIROBI SECURITIES EXCHANGE: The Nairobi Securities Exchange (NSE) is the principal securities exchange of Kenya. Besides equity securities, the NSE offers a platform for the issuance and trading of debt securities. The NSE is a member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). It is an affiliate member of the World Federation of Exchanges (WFE), an associate member of the Association of Futures Markets (AFM) and a partner Exchange in the United Nations Sustainable Stock Exchanges Initiative (SSE). For more information, please contact: Boniface Mbogo, Senior Officer, Communications on Email: bmbogo@nse.co.ke

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

RETIREMENT BENEFITS AUTHORITY: The Retirement Benefits Authority (RBA) was established under the Retirement Benefits Act and is mandated to: regulate and supervise the establishment and management of retirement benefits schemes; protect the interests of members and sponsors of retirement benefits sector; promote the development of the retirement benefits sector; Advise the Cabinet Secretary, National Treasury and Economic Planning on the national policy to be followed with regard to retirement benefits industry and implement all government policies relating to the retirement benefits industry. For more information, please contact: Alex Mugambi, Head of Corporate Communications on Email: amugambi@rba.go.ke

Nairobi cityscape - capital city of Kenya

CMA graduates Chumz App from the Regulatory Sandbox

Nairobi, 30 August 2022…The Capital Markets Authority (CMA) has announced the exit of Moneto Ventures Limited from the Regulatory Sandbox following successful testing of its innovation Chumz App. The Authority has also concurrently approved the roll-out of the mobile application to the mass market.  

Chumz App, built by Moneto Ventures Limited is a mobile application which functions as a collective investment scheme (CIS) intermediary service platform. It enables investors to save and invest towards a specific goal with as low as Kshs5. The funds earmarked by clients towards a specified goal are held by a custodian bank licensed by the Authority for safe-keeping and invested in a CIS registered by the Authority. As such, investment decisions are undertaken by a licensed fund manager. Investors can withdraw their savings at any time, through their mobile phones.

‘The innovation by Moneto Ventures Limited facilitates CMA’s mandate of promoting a high level of savings and investments from retail investors and enhances investments to support economic development’, said CMA Chief Executive Officer Wyckliffe Shamiah. He noted that the value of the Regulatory Sandbox was evident in providing a supportive regulatory environment for promising innovations to operate, subject to applicable restrictions on client access and investment size.

Moneto Ventures Limited was admitted to the CMA Regulatory Sandbox in May 2021 and becomes the sixth firm to exit after Pezesha Africa Limited, Genghis Capital Limited, Innova Limited, Central Depository and Settlement Corporation and Fourfront Management Limited.

 

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Chairman, Mr. Ugas Sheikh-Mohamed and CEO, Mr. Wyckliffe Shamiah, during a courtesy call to the PS

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Chairman, Mr. Ugas Sheikh-Mohamed and CEO, Mr. Wyckliffe Shamiah, during a courtesy call to the PS, State Department for Diaspora Affairs, Ms. Roseline K Njogu to discuss capital market investment opportunities for Kenyans in Diaspora. They exchanged valuable insights on how to enhance and facilitate capital market investment avenues that can cater to the unique needs and preferences of Kenyans living abroad. The Chairman expressed CMA’s commitment to fostering a secure and collaborative environment that encourages participation from the Diaspora community in capital markets and commodities.

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Luke Ombara, Director Policy and Market Development

“ Luke Ombara, Director Policy and Market Development, flanked by Mr. Kamunyu Njoroge, Senior Manager, Education, Awareness and Cerification (right) and Mr. Breitner Nyantika, Senior Officer Policy Analysis and Formulation during the launch of the Capital Markets Soundness Report (CMSR) for Q2,2023.”

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