Continuing with the pace of more regulations to strengthen the securities industry in Kenya, the capital markets authority (CMA) has availed at their website even more draft regulations for public discussion that cover internet trading, disciplinary actions, takeovers and licensing. In addition to those rules for public offers they have;

Internet trading
– Kenyan organizations or those which target Kenyan investors need CMA approval
– Source of platforms: they may own, gets from eth exchange (NSE) or use other platforms if CMA approves.
– Those who already have should re-apply – licenses are renewed annually, and are canceled automatically if one stops being stockbroker, network or exchange
– All platforms should Ensure confidentiality, safety of data (no manipulation, virus etc), back up plan, maintain audit trials Encryption and firewalls, Prevent duplication of orders
– Stockbrokers can sponsor chat rooms
– Traders to Report monthly on number of users, transaction averages, and system downtime

Disciplinary Processes
– Proposes creation of disciplinary committee that follows civil law e.g. sharing of evidence, call witnesses, cross-examination
– Committee can warn or censure firms or persons or can suspend or revoke licenses

Take-overs (intended to sort out carbacid-type deals)
– Board of company being targeted for take over must hire an independent financial adviser
– Offeror to make public announcement, if there’s unusual movement in target company share price
– No withdrawal of offers unless the CMA rejects it; also the target company has 3 weeks to decide
– If takeover fails, have to wait at least 12 months before making anther attempt – specifies format of takeover documents and reply documents to be filed with the authorities

Licensing (for securities exchanges, stockbrokers, investment advisors)
– Stockbrokers (share cap 50 million or~$670,000) to disclose their information technology, and comply with ration for overdrafts, borrowings
– Agents can only work with one stockbroker, and may not handle client funds
– Dealers (share cap 20 million or $267,000) to disclose their information technology, and comply with ratios for overdrafts, borrowings and investment portfolio liquidity
– Investment advisers (share cap 2.5 million or ~$33,000) their portfolio may not exceed Kshs 10 million ($133,000) otherwise may have to become fund manager to handle larger business
– Fund managers (share cap 10 million) and Investment banks (share cap 250 million) must also disclose their information technology, and comply with ration for overdrafts, borrowings

send comments to ceoffice@cma.or.ke