4.2: Develop commodities and derivative markets

Measurement
CMA to consult with the industry and outside experts on the changes needed to current regulations and then implement the changes.
Working Group
Achievement

Capital Markets (Derivatives Markets) Regulations 2016 gazetted in March 2016.
A review of the rules and regulations will be undertaken after market go-live in 2018.

Status
In progress
Measurement
CMA to obtain legislative changes to ensure all derivative markets come under its remit.
Working Group
Achievement

This has been incorporated in the legal framework for Derivatives as prescibed in the Capital Markets Act.

Status
Completed
Measurement
CMA to up skill as necessary in order to effectively determine if a financial derivatives market should be authorised and also have the skills to effectively supervise it. Rest is dependent on 4.2.1
Working Group
Achievement

NSE granted a license to operate a Derivatives Exchange in December 2014.
NSE granted SRO status by the Authority in 2016.
The Authority on 15th May 2018 granted the NSE approval to  roll out pilot testing of the derivatives market for a period of 6 months. The approval is restricted to selected market participants and on Equity indexes & single stock derivatives. Further, Cooperative Bank of Kenya and Stanbic Bank of Kenya were granted a provisional approval by CBK to participate as clearing and settlement bank during the pilot test phase.

Status
In progress
Measurement
CMA to work in collaboration with the National Treasury to develop a favourable tax framework that can support its growth.
Working Group
Achievement

A favourable tax framework to support derivatives is in place.
There are engagements with KRA to issue guidance notes on treatment of derivative transactions.
A resident consultant is currently working on a Tax Policy Framework for Derivatives Markets which will be completed in 2018.

Status
In progress
Measurement
Provider of the financial futures exchange to develop educational material. CMA to determine suitability of the material Industry (CMA, exchange, member firms) as a whole to undertake the education of traders and potential investors.
Working Group
Achievement

NSE consultant has undertaken various capacity building programmes with market players.
The Authority in conjunction with NSE has undertaken various awareness building programmes with market players.
A draft CMA derivatives market capacity building program has been developed and is undergoing review and is expected for rollout in Q1 2018.

Status
In Progress
Measurement
Implementation Committee to undertake study or leverage any existing studies to determine if it has an opportunity to become the price setting centre for an internationally traded commodity.
Working Group
Achievement

The Authority is a member of the National taskforce in the development of commodities exhange in Kenya.
The Authority is a member of the Coffee Sub-Sector Reforms Implementation Committee that aims to transform Nairobi Coffee Exchange into a fully fledged coffee exchange.
Feasibility study on the viability of a commodities exchange in Kenya has been undertaken.
Project Management Office established under State Department of Trade.

Status
Time bad
Measurement
Ministry of Agriculture to actively promote such schemes and discuss with external bodies including funding agencies and potential suppliers of the necessary infrastructure.
Working Group
Achievement

The Authority submitted proposed amendments to the Warehouse Receipt Systems Bill in 2016.
The Bill is currently in its 3rd reading in the Senate.
The Bill is currently in the Senate awaiting enactment.

Status
In Progress
Measurement
New spot markets need quality and effective regulation WG3 to lobby Chief of Staff, Office of the President and Ministries of Agriculture and Minerals.
Working Group
Achievement

The Authority was appointed as a primary regulator for spot commodities markets by Finance Act 2016.

Status
Completed
Measurement
Before spot trading can take place on a spot commodity exchange, the necessary rules and regulations need to be developed. CMA to discuss with potential operators of such exchanges a suitable regulatory regime.
Working Group
Achievement

Nairobi Coffee Exchange rules framework has been reviewed and submitted to the Attorney General's office for gazettement.
The State Department of Trade has on boarded international consultants to operationalise the establishment of Commodities Exchange (COMEX) in Kenya.
The Authority has on boarded an international consultant to provide technical support towards the development of the regulatory framework for commodities exchange.
The draft Commodities Exchange regulations have been developed and amendments to the Act proposed.

Status
In Progress
Measurement
Ministry of Energy to have discussions with the industry players and outside experts who have experience of such trading systems in order to determine the case for such a market.
Working Group
Achievement

To be progressed once the commodities exchange has been established.

Status
In Progress
Measurement
WG3 to lobby Chief of Staff, Office of the President and Ministry of Energy to determine the regulatory environment, in order to ensure no gap in the regulatory regime.
Working Group
Achievement

The Authority was appointed as a primary regulator for spot commodities markets (including energy) by Finance Act 2016.

Status
Completed

Key

No Progress
Behind Schedule
Ahead of Schedule