NAIROBI, Kenya, Sep 24-The Capital Markets Authority (CMA) has announced the admission of FourFront Management Limited to the Regulatory Sandbox, bringing the total number of firms admitted to the live-testing environment for capital markets innovations to seven.
The financial technology (fintech) firm is a wholly-owned subsidiary of Standard Investment Bank (SIB), a licensed investment bank.
FourFront Management Limited proposes to test a robo-advisory solution targeting 100 investors during a four-month period.
A robo-advisor is a digital platform that provides automated, algorithm-driven financial planning and investing services with little to no human interaction.
A robo-advisor collects information from its clientele about their financial situation and future goals through online survey and then leverages the data as a basis to offer investment advice and automatically invest client assets.
Typically, robo-advisors offer easy account setup, robust goal planning, account services, portfolio management, and security features, attentive customer service, comprehensive education, and low fees.
CMA Acting Chief Executive Wyckliffe Shamiah said, ‘the admission of FourFront Management Limited to the Regulatory Sandbox will build our capacity as a regulator, to respond to the impact and support implementation of new technologies in the capital markets value chain.’ Investment technology is one of the core ways financial technology is likely to disrupt Kenya’s capital markets.
Stockbrokers and custodians are leveraging economies of scale to roll out low-cost, or even zero-cost portfolio management platforms, or to partner with robo-advisors to enhance financial access, quality and inclusion.
In line with the CMA Strategic Plan 2018-2023, CMA aims to facilitate innovation and fintech adoption within the industry through the introduction of platforms, software, and tools that enhance investment decision-making and contribute to accelerating the shift towards passive investments.
A key interest for CMA in leveraging technology to drive the capital markets value chain is the implementation of robo-advice technology.
In compliance with the CMA Regulatory Sandbox Policy Guidance Note 2019, FourFront will be required to provide periodic reports to the Authority on the implementation of its test plans, the achievement of test objectives, risks, and challenges observed during the testing period, and a final report prior to the expiry of its testing period.