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’’.