Stockbrokerage agents being roped in

July 15, 2011
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, NAIROBI, Kenya, Jul 15 – The Kenya Association of Stockbrokers and Investment Banks (KASIB) has embarked on the registration of all stockbrokerage agents in the country as it seeks to enhance corporate governance and as a demonstration that it is embracing self-regulation.

KASIB Chairman Michael Gichohi said the move is among a raft of measures aimed at regulating the industry and improving liquidity in the capital markets.

“KASIB would like to take stock of all agents as they mostly interact with the bulk of investors,” explained the chairman.

The reputation of the stockbrokerage fraternity has gone downhill in the last few years especially with the placing of several firms such as Ngenye Kariuki, Nyaga Stockbrokers and Discount Securities under statutory management in 2009.

Rumours of many stockbrokers facing serious corporate governance and liquidity problems have not helped matters either.

Mr Gichohi admitted that most of the investor complaints they receive emanate from transactions involving agents creating a need to restore investor confidence in the market.

To achieve this objective, they will undertake an accreditation process which will involve training of agents, which will be a mandatory requirement.

The association has already prepared the syllabus and preparation of the teaching materials and hand-outs is underway, he disclosed.

Stock agents are usually registered by respective stockbrokers to increase their market outreach. However, to augment self-regulatory mechanisms the KASIB Board resolved to maintain a register of agents.

Upon completion of the exercise, a list of the accredited agents will be published in national dailies and will be issued with a certificate which will be displayed at their premises.

“The association has noted that some agents move from one stockbroker or investment Bank to another, replicating malpractices along the way. But in the dawn of self-regulation by brokers their names will be listed on the KASIB website and circulated to other market stakeholders,” Mr Gichohi reiterated.

The agents will be required to abide by a code of ethics developed by the association although it has not disclosed the penalties they will mete on offenders.

But even with these measures being put in place, investors have been urged to be vigilant and are encouraged to deal only with registered agents to avoid losing their money to fraudsters.

The Capital Markets Authority has on its side continued to carry out inspections in the operations of the brokerage firms to ensure an orderly and efficient capital markets.

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