The Capital Markets Authority(CMA) says it has put in place measures to ensure the market remains stable and resilient against the disruptive effects of the global coronavirus pandemic.
“We are focused on several plans to enable the market to survive the negative effects of the pandemic. One such initiative is the recent piloting of the Securities Lending and Borrowing Platform which will enable those with assets held at the Central Depository and Settlement Corporation to lend them out and earn a return. This platform aims to increase liquidity in the market,” said Wycliffe Shamiah, Acting Chief Executive, Capital Markets Authority(CMA).
He said that while the prices at the stock market are on a decline, this is an opportunity for investors to enter the market at bargain prices.
He made this remarks at a webinar held to launch the 15th edition of the Capital Markets Authority (CMA) Soundness Report, covering Q2, 2020 period.
“We are also revising the regulatory framework and existing structures to enable small and medium-sized enterprises to raise funds through capital markets,” said Shamiah.
While it is much cheaper for cash-strapped SMEs to raise funds from the capital market, lengthy, expensive and cumbersome requirements that must be met before these firms can access funding has kept most SMEs from the capital market.
“We intend to increase the participation of retail investors in the market by increasing the number of digital channels available to them to access the market,” said Shamiah.
CMA intends to leverage available digital platforms to improve on service delivery to investors and other market participants as well as improve on accessibility.
The Authority has already introduced several measures to enable listed firms to survive adverse effects of COVID-19 including allowing the holding of virtual AGMs as well as reducing the cost of statutory compliance and relaxing some aspects of financial reporting standards.
“We are in the process of setting up a COVID-19 monitoring team to ensure the market remains stable despite the pandemic. The authority is also working on a new regulatory framework that will eliminate obstacles that counties, SMEs or state corporations face in a bid to raise funds from the capital market,” said Luke Ombara, Director, Regulatory Policy and Strategy, at the CMA.
CMA is reviewing existing laws to ease listing and raising of funds from the capital markets
He disclosed that the Authority had engaged the services of a consultant to assist it with a review of the Public Offers Listing and Disclosures) Regulations 2002.
“The first phase, which involved a diagnostic analysis, is complete. We are now at the policy formulation stage, the document to be validated by stakeholders by the end of September,” said Ombara.
He said the second phase will include legislative drafting with new listing regulations to be ready by June 2021. This new regulatory regime is expected to attract initial public offers (IPOs) that have not been witnessed at the Nairobi Securities Exchange(NSE) for the past five years.
The Kenya Investment Mechanism Project, he said, will engage and collect feedback from retail and institutional investors as well as listed firms, investment bankers, fund managers as well as other market intermediaries.
The new rules are expected to boost listing activities as well as allow SMEs and County Government to raise funds through the issuance of bonds.
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