, NAIROBI, Kenya, Jul 22 – In fulfilment of the commitment of the Jubilee Government in the first 100 days, the National Treasury has managed to introduce amendments to the Capital Markets Act.
This has brought about the establishment of Commodity Futures Markets for trading commodities and currencies, in April this year.
The futures are expected to significantly boost farmers’ earnings especially those in the coffee and tea sectors by helping them stabilize prices of commodities that tend to fall sharply during harvest when there is a supply glut.
Nairobi Securities Exchange (NSE) CEO Peter Mwangi said that this is a great achievement as this will give farmers access to a bigger market for their produce.
“We welcome the new regulations for futures. We see it as an opportunity for our markets and we will be talking to the Capital Markets Authority (CMA) to see what NSE can begin to offer. On the first instance we would want to begin with financial futures,” Mwangi told Capital FM Business.
A commodity future market is where participants buy and sell commodities also referred to as future contracts, to be delivered on a specified future date and at a fixed price.
Central Depository and Settlement Corporation CEO Rose Mambo however said with all this growth in our capital markets there was need to improve technology and enhance efficiency.
“We have the coffee exchange, tea, and maize is even coming up. And with all these changes coming up, especially the futures market, we need to upgrade our systems,” Mambos noted.
The changes in the Act has also led to the introduction of Real Estate Investment Trust (REITs) product, which is aimed at addressing the housing deficit in the country.
REITS are regulated investment vehicles that enable collective investment in real estate where investors, both retail and corporate, are allowed to pool their funds under the umbrella of the REIT and then engage in housing projects.
The vehicle would give small investor groups, keen on entering the property market, assurance of secure investment under the regulatory framework.
“One of the barriers to growth is lack of policies and appropriate laws. But in this case we are grateful for the CMA and National Treasury to have facilitated these changes, without forgetting all other stakeholders. We want our markets to shine and be the leader in the whole of the East African Community and the continent at large,” Mambo noted.
The CMA Act amendments have also put in measures to prosecute market manipulation offenders.