Press Release

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



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: This email address is being protected from spambots. You need JavaScript enabled to view it.
Antony Mwangi, MPRSK

Head of Corporate Communications

Capital Markets Authority

3rd Floor, Embankment Plaza

Longonot Road, Upper Hill

P O Box 74800


Tel: +254 2 2264900, 2264204 (D/L)

Cell: +254 722 825227

Email: This email address is being protected from spambots. You need JavaScript enabled to view it.


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