NAIROBI, Kenya, Jul 18 – The Capital Markets Authority (CMA) has published draft Capital Markets Licensing Requirements for Online Forex Brokers and Conduct of Online Forex Business Regulations 2016, to provide the requisite regulatory framework to safeguard effective and secure online forex trading in Kenya.
In the new draft regulations, online forex brokers will be required to have a minimum capital of Sh50 million.
The brokers will also be expected to maintain the minimum capital at all times and to ensure that Sh40million or 80 percent of its capital is in form of cash and cash equivalents in financial instruments at all times.
The new measures are intended to foster investor protection, integrity, fairness, market confidence and proper conduct by forex brokers.
According to Standard Investment Bank Research, over 50,000 Kenyan investors are participating in online forex trading through foreign registered brokers who link through the Internet to access the highly liquid currency clearing centres in the USA, Europe, Japan and other countries.
“Providing a legal framework for the online trading of foreign currency is expected to aid in ensuring potential traders have a safer trading environment, facilitates diversification of financial activities and serves to strengthen Nairobi’s position as a financial hub,” the research firm indicated.
Deadline for submission of comments on the new regulations is August 17, 2016.
Treasury Cabinet Secretary Henry Rotich through the Finance Bill 2016, proposed to introduce an amendment to the Capital Markets Act to regulate this business.