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CMA encourages use of technology to enhance ESG data collection and reporting in the capital markets

Nairobi, 21 December 2023…The Capital Markets Authority (CMA) has expressed support for the adoption of technology in ESG data collection to enhance transparency in ESG reporting. This is aligned to CMA’s ambition of leveraging technology to enhance efficiency of the capital markets value chain.

The CMA Chairman, Mr. Ugas Mohamed, observed that enhancing the efficiency of ESG data collection using technologies such as Artificial Intelligence (AI) in capital markets is a significant milestone. ESG factors have become key considerations for investors seeking sustainable and socially responsible investment opportunities.

Mr. Mohamed said, ‘’ESG reporting frameworks are key to support corporate disclosure on sustainability and ethical performance of their business operations. These frameworks offer a structured approach to evaluating a company’s practices and ESG-related business risks and opportunities, including impact on the environment and society’’.

The importance of AI-driven ESG data collection tools was highlighted during the recent African Stock Exchanges Association (ASEA) conference held in Nairobi, 22-24 November 2023.

The Nairobi Securities Exchange (NSE) is working with listed companies on the adoption of ESG frameworks for listed companies. ESG reporting is voluntary for listed companies in Kenya with twenty-nine companies having adopted the practice so far.

With the growing adoption of enhanced ESG reporting globally, more Kenyan listed companies are expected to come on board as this is emerging as a key consideration for investors. ESG reporting is mandatory in some jurisdictions such as in China, Malaysia, UK, and the EU, with disclosure requirements stipulated in law. During the COP28 meeting, the importance of mitigation measures to address the impact of climate change was underscored due to the growing concerns at a global level.

NSE plans to introduce an index to measure disclosures and performance on climate change action including carbon gas emissions by listed companies, which is expected to lead to increased uptake of ESG reporting.

CMA also welcomed the publication of standards for Sustainability-related Financial Information (IFRS S1) and Climate-related (IFRS S2) Disclosures by the International Sustainability Standards Board (ISSB), which have set globally acceptable benchmarks in reporting.

 

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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

Nairobi cityscape - capital city of Kenya

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

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

Nairobi cityscape - capital city of Kenya

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

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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).
  5. 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

Nairobi cityscape - capital city of Kenya

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

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

Nairobi cityscape - capital city of Kenya

CMA licenses three new intermediaries

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

Nairobi cityscape - capital city of Kenya

CMA cautions investors against investing in unregulated products offered or promoted by unlicensed firms or unapproved entities

Nairobi, 17 June 2021…In line with its investor protection mandate, the Capital Markets Authority (CMA) has cautioned investors against investing through unlicensed and unapproved entities.

The CMA Chief Executive, Mr. Wyckliffe Shamiah, advised investors to only invest through licensed and approved entities who offer and promote regulated products, to enable them get protection offered by the Authority through the capital markets legal and regulatory framework. Investors who invest in unregulated products offered or promoted by unlicensed and unapproved entities risk loss of their investments with no recourse afforded to them under the capital markets regulatory framework.

Following numerous enquiries regarding the licensing status of the Cytonn Investment Group, Mr. Shamiah said, “the Authority confirms that Cytonn Investments is not a licensed and approved entity.” He further stated that, “investors who are affected by investing in unregulated products should report to the Capital Markets Fraud Investigation Unit

(CMFIU), which is the Police Unit attached to the Capital Markets Authority. CMFIU is currently investigating the issue for criminal violations for investors in the Cytonn High Yield Solutions (CHYS). He reiterated the Authority on 20 April 2020 communicated this same information to the public’’.

CMA has licensed Cytonn Asset Management Limited, which is licensed as a Fund Manager managing the following regulated funds: Cytonn Money Market Fund; Cytonn Balanced Fund; Cytonn Equity Fund; Cytonn Africa Financial Services Fund; Cytonn Money Market Fund (USD); and Cytonn High Yield Fund. So far CMA has not received any complaints on these regulated products.

Investors are advised to confirm the names of the licensed and approved entities offering services in the capital markets industry from the CMA website www.cma.or.ke. Members of the public who have been affected or have come to be aware of such illegal entities are advised to report to the Authority or to the Capital Markets Fraud Investigation Unit.

 

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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. 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 and International Relations, on amwangi@cma.or.ke

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