After taking a public beating from almost everybody in the country (from the President down to school kids) the Capital markets Authority (CMA) has decided to announce how it will bite back with a raft of new proposals posted at its website
– Raises stockbroker share capital to 50 million shillings (~$800,000) from the current 5 million, while that of investment banks goes up to 250 million
– Bars people who have been convicted of an economic crime from being brokers – But since no one gets convicted of economic crimes in Kenya, how about being associated with a collapsed firm? The new law says anyone who previously worked at another firm must get clearance from the former (but what if it collapsed?).
– owner/ managers: Owners cant be day to day managers, and no one can own more than 25% of a broker/i-bank
– Brokers must also maintain lists of employees and keep better records absolutely!
– best of all they must publish half yearly financial results in the newspapers, and also get insurance cover equivalent to 5 x their daily turnover (good luck with that),
and some indigestion perhaps
But the CMA also gives itself a lot of work to do, and which it may not be able to keep up with:
– Brokers can’t close office / or open one without notifying CMA
– brokers must report any overdrawn customer account within 24 hours
– Brokers will forward monthly accounts, and quarterly portfolio reports to CMA.
Also
– Investor compensation fund is now a CDS compensation fund (what’s that, and who runs it?)
– muzzles agents; agents can’t work for more than one broker
Other
– sad news: today’s fatal plane crash in S. Sudan has a Kenyan connection
– New stockbroker is an old one renamed according to the business daily; some name changes work, others don’t
if this is implemented, this a significant step forward. the best one for investors is the requirement to publish accounts. Bearing in mind the findings on FT, i’d like to see CMA only accepting audited financial reports.
It’s a good step forward. I hope they don’t bury their head in the sand a AGAIN!
These are proposed amendments for action by parliament, right?
Is there a kind of international standard they are following?
I thing we need more competition and transparency not regulation in this area, CMA is only trying to raise the barrier for entry into the market
This is a move long over-due. Investors now can invest with confidence. I dont think its lots of work for CMA, what have they been doing all along when investors were loosing their cash in the fallen brokers!!
In any case, the increased volume of trade at the NSE could only call for tighter controls to safeguard investors wealth.
hmm looks to me like its just adding barriers of entry rather than changing the rules. what do u think