Kenya CMA introduces Forex brokers licensing requirements


July 19, AtoZForex – Just today, the African country of Kenya’s financial regulator Capital Markets Authority (CMA), has published the draft of “Capital Markets Licensing Requirements”. This draft is going to be used for “Online Forex Brokers and Conduct of Online Forex Business Regulations 2016”.

Kenya CMA introduces Forex brokers licensing requirements

As it is stated in the official document from the CMA, the number of the Kenyan investors, trading through foreign registered brokers, is estimated to over 50,000. However, there is no regulatory framework governing online Forex trading in Kenya currently.

Kenya’s financial infrastructure was maturing very fast since the country has planned to establish its first futures exchange in 2014. The process of establishing the regulation for the FX brokers in Kenya was sluggish as a consequence of gaps between the international jurisdictions in regulating the sector. Finally, the CMA is about to protect Kenyan traders by providing clear rules and laws within their domestic jurisdiction.

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The official CMA draft's details

The draft of licensing requirements will be serving as a regulatory framework to safeguard secure and effective Forex trading in Kenya. The draft published by CMA requires the following form the applicants seeking a license:

(a) be a company limited by shares;

(b) have a chief executive who is a fit and proper person as described under section 24A of the Act and who has experience of not less than five years in the business of buying, selling or dealing in forex, forex futures or futures contracts;

(c) have the necessary infrastructure including office space, equipment, and trained staff to effectively discharge its activities;

(d) have as its directors and key personnel, persons who are fit and proper as described under section 24A of the Act;

(e) have a minimum capital of Kshs.50 million (approximately $500,000);

(f) make an undertaking to maintain the minimum capital at all times plus 5% of liabilities owed to forex customers in excess of Kshs. 50 million; and

(g) ensure that Kshs. 40 million or 80% of its capital, whichever is higher, is in the form of cash and cash equivalents in financial instruments at all times.

The new regulatory Forex brokers licensing requirements are created to strengthen investor protection, fairness, integrity and market confidence, as it is reported in the draft. The indicated deadline for submission of comments on the new regulatory rules is August 17th, 2016.

AtoZForex has reached out to CMA officials for the further insights on the case and is currently waiting for the response.

See also: Western Union digital trading platform expands

Stay tuned with AtoZForex for the updates on the case!

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