4.2: Develop commodities and derivative markets
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.
This has been incorporated in the legal framework for Derivatives as prescibed in the Capital Markets Act.
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.
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.
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.
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.
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.
The Authority was appointed as a primary regulator for spot commodities markets by Finance Act 2016.
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.
To be progressed once the commodities exchange has been established.
The Authority was appointed as a primary regulator for spot commodities markets (including energy) by Finance Act 2016.