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Kenya

Markets authorities disagree over Equity

NAIROBI, Kenya, Apr 8 – The Capital Markets Authority on Wednesday overturned the suspension of Equity Bank as an agent, just hours after the order was imposed by the Central Depository and Securities Corporation (CDSC).

The bank had on Wednesday morning been frozen from acting as a Central Depository Agent (CDA) for 14 days by the securities body which had not indicated reasons in a circular to other stockbrokers.

The move was however revoked hours later by the Capital Markets Authority (CMA) which said it had not okayed the suspension.

““In accordance with the Central Depository Act 2000, the Capital Market Authority is required to approve the suspension procedure .This was not done,” said CMA Chief Executive Stella Kilonzo.

“Furthermore any suspension by CDSC should only be effected after consultation with CMA. This was not done”

The development at the stock markets came on the same day when trading of Kenol Limited’s shares were suspended as CMA launched investigations into an irregular transaction that took place on Monday.

“During continuous trading on 6 April 2009, a transaction of 1,472,600 Kenol Limited shares were executed across the books of an Investment Bank at Sh30 on the prompt board, even when there were offers of between Sh41 and Sh52 on the normal board,” a statement from CMA said.

The statement further indicated that there were willing sellers and buyers of the share at prices between Sh.44.50 and Sh52 which were rejected since the highest price available for execution was Sh33.

The security’s price was therefore locked at Sh30, as no deal could be executed at a higher price.

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“This led to no execution on Tuesday and thus the security closed at Sh30 which was the previous closing price.”

 According to CMA’s preliminary investigations, the transaction was unusual.

“As we conduct further investigations into this matter we have sought to correct the market by opening the limits for one trading session on 9th April 2009 to allow the share to settle at its rightful price.”

In the meantime, the markets regulator directed the CDSC to suspended settlement of the contentious transaction pending completion of the probe.

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