Kenya’s Capital Markets Authority (CMA) is making important strides with developments in the capital markets such as the development of the regulatory sandbox, the implementation of the hybrid bond market, and the pilot testing of the derivatives market.
Current Developments that are in Progress
According to its soundness report for the second quarter of 2018, CMA in partnership with Open Capital Advisors and Financial Sector Deepening Africa completed a landscaping study “aimed at establishing the position, size and FinTech firms whose innovations are aligned to the Authority’s regulatory sandbox.”
The study identified potential use cases of the regulatory sandbox such as portfolio management services, unit trust wealth management services, crowdfunding, the blockchain, artificial intelligence and reg tech.
Consultants from the Consultative Group to Assist the Poor (CGAP) have also completed an inception report Policy framework and the Policy Guidance Note on the establishment of a Regulatory Sandbox for Capital Markets based on the input received from the mapping study.
The Authority has also completed the preparations for the derivatives pilot test which will be rolled out in a period of six months within the first half of the current financial year. The rollout will target specific market participants and product categories. CMA has also carried out awareness programs through its Derivatives Unit.
With regards to the implementation of a hybrid bond market, CMA is working with consultants from FDHL-Salonica Consortium who have submitted an inception report which reviews the Kenyan bond market.
“The consultancy will further support the development/amendment of regulations, rules and guidelines for effective and transparent bond trading operations and oversight and also develop approval/ licensing framework or requirements for recognition of an appropriate industry body to take up the role of a Self Regulatory Organization (SRO) for Over the Counter bond transactions and act as a market coordinator/organizer,” the soundness report reads.
CMA is also facilitating Islamic finance through a workshop that was held in May this year in conjunction with the Islamic Financial Services Board and working on county financing as a capital markets product.