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Kenya gears up for Futures Exchange

NAIROBI, Kenya, Jun 8 – The Capital Markets Authority is inviting applications for the implementation and operation of a Futures Exchange in Kenya.

Local and international applicants must submit their applications to the regulator by June 30, but there is still no indication when it would become operational.

A futures exchange works by way of having a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.

These types of contracts fall into the category of derivatives such as energy, mineral or agricultural produce and they aim to cushion consumers from price volatilities in the market.

CMA Chief Executive Officer Stella Kilonzo said this is a follow up of the policy pronouncement by Finance Minister Uhuru Kenyatta, in the 2010 budget speech that a Futures Exchange would be set up in Kenya.

Mrs Kilonzo said a multi-sectoral task force was established and tasked with developing the policy, institutional and legal framework for establishing a futures market in Kenya.

Currently, Kenyans are hit hard by rising prices of commodities that are being subjected to international oil prices, which has seen the cost of living skyrocket.

Mrs Kilonzo explained that the establishment of a futures exchange would benefit all sectors of the economy by addressing the current volatility of price s of commodities that would be traded in the Futures Exchange.

\’\’The proposed Futures Exchange would be incorporated as a demutualized corporate entity to create a new class of investment opportunities that will help elevate the Kenyan economy to a new level in the global economy by facilitating futures trading of multi-asset classes including currency, mineral and energy derivatives," she said.

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