CMA exits second Robo-Advisor from the Regulatory Sandbox
Nairobi, 12 October 2022…The Capital Markets Authority (CMA) has granted a ‘No Objection’ to Waanzilishi Capital Limited, to roll-out a robo-advisory solution to the mass market upon the successful completion of the test in the CMA Regulatory Sandbox.
The firm is licensed as both fund manager and investment advisor by CMA. Through the robo-advisory platform, investors will have access to collective investment schemes approved and registered by the Authority, Government bills and bonds and Exchange Traded Funds listed in offshore stock exchanges. Waanzilishi Capital becomes the second to successfully test a robo-advisory platform. The first rob-advisory firm that exited the Regulatory Sandbox. is Four Front Management.
Robo-advisors are platforms that offer automated investment advice. Through its Ndovu App an investor creates a profile to aid in determining his risk profile (risk appetite) and investment goals. The robo-advisor will then use information provided by the investor and inbuilt algorithms to recommend a portfolio of suitable investments to the investor. When changes in circumstances occur in the investor’s life, the latter will inform the firm and the investment portfolio may be rebalanced to reflect the change in situation.
Waanzilishi Capital Limited was admitted to the Regulatory Sandbox live-testing environment for fintech innovations on 17 December 2021. ‘The firm will be required to continue compliance with the CMA Framework to Roll-out a Robo-Advisory Solution in addition to continuous licensing requirements for Investment Advisers and Fund Managers’, CMA Chief Executive Officer Wyckliffe Shamiah noted. Mr. Shamiah added that robo-advisory platforms offer low-cost, and convenient access to capital markets and thus rally retail investors’ participation.
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.
ABOUT THE CMA REGULATORY SANDBOX
Established through the Capital Markets Regulatory Sandbox Policy Guidance Note, 2019 the Regulatory Sandbox is a tailored regulatory environment for conducting limited scale, live tests of innovative products, solutions, and services that have the potential to deepen or broaden the Kenyan capital markets. It provides an evidence-based tool for fostering innovation while allowing the Authority to remain vigilant to investor protection, financial stability, and integrity risks. The Regulatory Sandbox supports the broader national policy agenda described in Kenya Vision 2030 and the 10-year Capital Market Master Plan. Drawing on emerging global best practices, the Authority seeks to position the Regulatory Sandbox as a tool for facilitating capital markets innovation in Kenya and helping to advance the Authority’s goal of creating a vibrant and globally competitive financial sector.