CMA to undergo reforms

October 10, 2008
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, NAIROBI, October 10 – The government has announced plans to reform the Capital Markets Authority (CMA) to guarantee investor protection and ensure a robust regulatory framework.

Vice President Kalonzo Musyoka says the reforms will enhance the capacity of market intermediaries and instil good governance within the industry.

Mr Musyoka added the comprehensive changes would enable the CMA play its part in ensuring Kenya becomes a major financial hub in East Africa.

"These reforms will ensure consistency and overall compliance of our capital markets legislation with international best practices including those prescribed by the international securities commissions with the view of strengthening capital markets supervisory capabilities," Mr Musyoka said.

The Vice President was speaking during the 7th Financial Reporting Awards Thursday night where Standard Chartered Bank emerged the overall winner.

Similarly, CMA chairman Professor Chege Waruinge urged players in the financial sector to adopt rules that will guard the market from credit vulnerabilities.

He said there was need to adopt a risk based-supervision approach to market regulation.

Professor Waruinge cautioned that a deregulated model, and the perception that big institutions cannot collapse, posed great dangers for any market.

"Memoranda of understanding will be undertaken between all financial sector regulators to cover areas of risk and cooperation with the objective to ensure that there are no grey areas that are unregulated," Professor Waruinge said.

He said the CMA is currently reviewing regulations on asset based securities gazetted last October. They were put in place to rate a company’s creditworthiness.

The remarks came against the background of apprehension among Kenyan investors that the global credit crunch in the American, European and Asian markets was making its way here.

The financial meltdown was triggered by a sub-prime mortgage crisis in the United States forcing that country to pass an urgent $700 billion bailout plan for home-buyers.

The UK and Asian countries have poured cash into their money markets in a bid to calm the volatility but to no avail.

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