NAIROBI, Kenya Mar 1 – Players in the capital markets will soon be self-regulated.
The Capital Markets Authority (CMA) believes the separation of powers and giving intermediaries more powers will improve the efficiencies in the country\’s markets.
CMA Chief Executive Officer Stella Kilonzo said the proposed Capital Markets Authority Act would identify clear opportunities for the regulator to support the growth of self-regulatory organisations to allow the market take a more proactive role in product development.
"It\’s really the best practice because from where you sit it\’s easier for someone to supervise their members at the first line and for us to agree on a reporting mechanism of the same," Mrs Kilonzo said.
She said although the Act was still in its draft form, the regulator would still consult with market players to discuss what amount of powers would be accorded to them to manage their affairs.
"We still need to look at what powers we would like to delegate to be it the Association of Stock Brokers or the Nairobi Stock Exchange," she said.
The move by CMA will be the most visible sign of a transition to a new regulatory regime in the local capital markets.
The review intends to address any gaps in the capital market that may have been identified over time.
She said the move would also respond to the inconsistencies that exist between regulations and how they are implemented.
"The amendments will allow the CMA to have the appropriate tools to respond effectively to market demand," she said.
As part of its reform process, the CMA is also seeking to introduce the Securities Industry Act that will allow the introduction of futures and derivatives trading platforms to respond to prospective market structure trends.
"These reforms will take us to the next level of regulatory reforms and benchmark our capital markets against international best practices," Mrs Kilonzo said.
The CMA has already announced the implementation of risk based supervision for stockbrokers and investment banks that will require them to shore up their capital to Sh50 million up from the current Sh5 million and to Sh250 million from Sh300 million respectively.
Mrs Kilonzo said the response in the market had been \’overwhelming\’ even ahead of the April 30 deadline for compliance.
As one of the raft of measures, the regulator will classify stockbrokers and investment banks according to the strength of their financial position, mental astute of the management team and market exposure in terms of products and client base.
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