KENOLKOBIL INVESTIGATIONS UPDATE

The Capital Markets Authority (CMA) wishes to inform our stakeholders that the first and second phase of the investigations with respect to suspected Insider Trading in the Kenol Kobil counter in the leadup to the announcement of the takeover offer from Rubis Energie in October 2018 have been completed and Ksh487 million of what would have been unfair profits disgorged through No Contest Settlement Agreements.

After consideration of the investigation findings, the CMA Board resolved to initiate enforcement proceedings against the Kestrel Capital Chairman & Founder, Mr. Charles Field-Marsham, Kestrel Capital Executive Director Mr. Andre DeSimone, and their stockbroking agents Mr. Aly Khan Satchu and Mr. Kunal Bid through issuance of Notices to Show Cause (Administrative Charges).

Upon review of the formal response to the Notice to Show Cause, the CMA Board cleared Mr. Charles Field-Marsham of potential liability for insider dealing; and further resolved to form an Adhoc Board Committee that incorporated independent members alongside board members for the specific purposes of conducting enforcement hearings and to determine the allegations of Insider Trading in respect of Mr. Andre DeSimone, Mr. Aly Khan Satchu and Mr. Kunal Bid. 

Once the hearings are completed and a decision made by the Ad hoc Committee, the Authority will make an appropriate announcement in line with the Capital Markets Act. Should sufficient grounds be established for criminal charges, the Authority will engage the relevant arm of the State.

The Authority notes with concern the media coverage on this ongoing administrative action and the speculation as to the determination of the same which is based on unverified reports, and trusts that the formal process for administrative justice will be allowed to proceed unhindered.

07 June 2019

CMA grants Nairobi Securities Exchange approval to launch Derivatives Exchange Market

Nairobi, 29 May 2019…The Capital Markets Authority (CMA) has granted approval to Nairobi Securities Exchange (NSE) to launch and operate the Derivatives Exchange Market pursuant to the Capital Markets Act and the Capital Markets (Derivatives Markets) Regulations, 2015.

This follows the successful completion of a six-month Derivatives Pilot Test Phase conducted between July and December 2018, and resolution of key issues that emanated from the test phase.

‘The approval granted to the NSE to operationalize a Derivatives Market marks the achievement of a flagship project under the Economic Pillar of Kenya’s Vision 2030. The Derivatives Market will facilitate deeper and more liquid capital markets and position Kenya closer to becoming the Heart of Capital Markets Investment in Africa, as envisioned in the Capital Markets Master Plan’, noted CMA Chief Executive, Mr. Paul Muthaura, MBS.

Initially, the Derivatives Market will offer investors Equity Single Stock Futures (SSF) and Equity Index Futures (EIF) and later introduce other financial and commodities derivatives.

Mr. Matthew Mukisu, Manager, Derivatives Unit observed that a robust infrastructure has been set up to facilitate trading, risk management, clearing and settlement. Two banks, Stanbic Bank and the Co-operative Bank, have been approved by their primary regulator to provide clearing and settlement for the Derivatives Exchange Market.

ENDS

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, Head of Corporate Communications on This email address is being protected from spambots. You need JavaScript enabled to view it.

Press Release

CMA recovers additional Ksh19 Million in connection with suspicious trades in KenolKobil shares

Nairobi, 20 May 2019…The Capital Markets Authority (CMA) has completed the outstanding aspects of the insider trading investigations into the KenolKobil counter and has secured the surrender of an additional Ksh19 million of potentially illegal gains through No Contest Settlement Agreements from an additional 5 traders whose accounts were frozen. This further recovery is in addition to the Ksh458 million recovered in March 2019 related to the larger component of the suspicious trades identified through a total of 14 frozen accounts. All the recovered funds will be paid into the Investor Compensation Fund.

Upon review of the final investigation findings and recommendations, the CMA Board has resolved to initiate enforcement proceedings against one more person by the name Mr. Kunal Bid, a Kestrel Capital Stock Broking Agent for possible insider trading in connection with 4 traders leading to potential illegal capital gains of Ksh23.5 million. At the same time the CMA Board has released funds amounting to Ksh3.8 million belonging to the last trader following a determination that he had not traded using insider information.

Furthermore, upon review of the written submissions of Mr. Charles Field-Marsham in response to the Notice to Show Cause issued to him and further investigatory findings, the CMA Board has cleared Mr. Charles Field-Marsham of potential liability for insider dealing.

The Authority has constituted an Adhoc Board Committee comprising of 4 CMA board members and 4 independent persons for the sole purpose of hearing and determination of the allegations contained in the outstanding Notices to Show Cause on the suspicious trades in KenolKobil shares. The 4 independent members are Hon. Retired Chief Justice Willy Mutunga; Dr. Jim McFie, a respected academic and business leader; Patricia Kiwanuka, President of the CFA Society of East Africa; and Anne Eriksson, former Country and Senior Regional Partner PWC.

ENDS

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, Head of Corporate Communications on This email address is being protected from spambots. You need JavaScript enabled to view it.

 

CMA Regulatory Sandbox Ready to Receive Applications

Nairobi, 26 March 2019…The Board of the Capital Markets Authority (CMA) has approved the Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) setting the stage for CMA to begin accepting applications for admission of fintech firms to its Regulatory Sandbox. 

“We welcome fintech firms and innovators to apply for admission to the Regulatory Sandbox. Where they are successful, they will have a 12-month period to deploy and conduct live-tests of their innovative products, solutions, and services”, CMA Chief Executive Mr. Paul Muthaura said. The Sandbox is expected to also accelerate CMA’s understanding of emerging technologies, support adoption of an evidence-based approach to regulation and facilitate deepening and broadening of Kenya’s capital markets.

In line with the Authority’s investor protection mandate, Sandbox Participants will be required to comply with certain minimum regulatory requirements prescribed by law. CMA will, however, assess regulatory requirements to be temporarily modified during a Regulatory Sandbox test on a case-by-case basis. In this context, the Authority will provide guidance where it considers that a proposed innovation is already clearly addressed under existing laws and regulations and therefore not fit for inclusion in the sandbox to avoid the creation of regulatory arbitrage between players rendering equivalent products or services.

Upon exit from the Sandbox, participants will be considered for:

  1. grant of an existing applicable license or approval to operate in Kenya subject to compliance with relevant legal and regulatory requirements;
  2. grant of permission to operate in Kenya subject to compliance with the specified terms of a letter of no objection in respect of a business falling outside existing regulatory provisions; or
  3. denial of permission to operate in Kenya in light of regulatory concerns identified during the testing phase.

Mr. Muthaura noted that ‘where the testing phase highlights that there is need for a broader legal or regulatory reform, the Authority will provide regulatory guidance through the various tools at its disposal ranging from new regulations to guidelines or notices pursuant to Section 12 and 12A of the Capital Markets Act.  “The opportunities created by a robust testing phase will ensure that subsequent regulatory prescription and guidance will be informed by the operational realities and insights gained from the Regulatory Sandbox test.”   

 

The PGN in all events specifies the circumstances in which the Authority can revoke or suspend an approval to participate in the Regulatory Sandbox as well as detailing the scope of regulatory and enforcement actions that can be taken in the event of participant misconduct.

Mr. Wycliffe Shamiah, Director of Market Operations and Head of the Authority’s Sandbox Review Committee noted that “at minimum, Sandbox applicants need to be companies incorporated in Kenya, including existing licensees of the Authority.  For foreign applicants, they will be required to already be licensed by an equivalent capital markets regulator.” Fintech firms will be considered for admission based on their documented plans to offer innovative products, solutions or services with the potential to deepen Kenya’s capital markets following successful exit from the Sandbox. 

“The Sandbox is however not an incubation centre and will not be able to receive applications based on ideas that have not been developed to the level of operational testing.”  The Authority is nonetheless working with existing incubation centers who are in a position to support innovators to develop capital markets-related innovative ideas to a level of maturity at which they can then be admitted into the Sandbox. “The Sandbox will therefore not be considering for admission of purely conceptual proposed products, services or business models” Mr. Muthaura explained. 

The Authority will treat all non-public information received in connection with a Sandbox application or test as confidential and proprietary to the concerned firms.  However, Fintech firms will be responsible for taking applicable measures to protect their intellectual property. 

ENDS

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, Head of Corporate Communications on amwangi@cma.

 

Press Release

CMA licenses Jubilee Financial Services Limited to operate as a fund manager

Nairobi, 14 May 2019…The Board of the Capital Markets Authority (CMA) has approved the grant of a license to Jubilee Financial Services Limited to operate as a fund manager having met all requirements. The grant of the license brings to 27 the number of fund managers licensed by CMA.

A fund manager is a manager of a collective investment scheme (such as a unit trust), registered venture capital company or an investment adviser who manages a portfolio of securities in excess of an amount prescribed by the Authority from time to time.

ENDS

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.

 

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