7.1: Strengthen and streamline financial regulation
Foreign participants are keen on investing in jurisdictions with coherent regulatory arrangements and are likely to prefer a fully integrated regulator.
For Kenya to be a globally competitive market, CMA as a member of the FSA Implementation Committee supported the Draft FSA Bill 2016 which was to merge the functions of the four non-financial regulatory bodies.The FSA Bill received Cabinet approval on 6 April 2017.The NT has further developed the Financial Markets Conduct Bill 2018. The Bill was developed to bring into regulation unregulated activities in the financial sector that have created challenges in consumer credit and market conduct by creating an effective financial consumer protection, make credit more accessible, support financial innovation and competition. The Bill provides for uniform practices and standards in relation to the supervision and conduct of providers of retail financial services based on International best practice. As at 31 March 2019, the Financial Markets Conduct Bill was under consideration at the NT following stakeholder comments.
CMA is proactively participating in the development of the policy, institutional framework, laws and transition arrangements relating to the integration.
A stable financial sector in Kenya.
As a significant contributor to financial sector stability, effective January 2017, the CMA pioneered the quarterly publication of the Capital Market Soundness Report that critically examines risks, challenges, and opportunities for the country’s capital markets, while highlighting mitigation measures. The CMSRs are published and launched to financial market stakeholders. These reports are published on the Authority’s website, thus making them easily accessible to stakeholders and interested parties both locally and globally.https://www.cma.or.ke/index.php?option=com_phocadownload&view=category&id=5&Itemid=261
Additionally, CMA provides input to the annual Joint Financial Sector Stability Report - a joint publication of Kenya’s five financial sector regulators: CMA, CBK, IRA, RBA, and SASRA. The FSSR highlights major risks and vulnerabilities of Kenya’s financial sector specifically and the country’s economy generally, while outlining policy actions taken by the regulators, government and other key stakeholders during the period, to mitigate those risks and vulnerabilities, besides sensitizing the public on the how financial stability could be sustained. The FSSR offers a platform for informed public discussion on all aspects of the development of Kenya’s financial sector. The FSSR is also published on CMA's website.
https://www.cma.or.ke/index.php?option=com_phocadownload&view=category&id=93&Itemid=288 In recognition of these efforts, on 16 August 2018, CMA was recognized for its ’Outstanding Contribution to Capital Markets Stability Africa’ by London based Capital Finance International (CFI) for its ongoing initiatives to support and facilitate capital markets stability on the continent.
Market-led capital markets development
The Capital Markets Amendment Act No. 48 of 2013 amended the Capital Markets Act by introducing Section 12 A that enables CMA to issue such guidelines and notices it considers necessary for the better carrying out of the functions of the Authority.
The guidelines and notices issued shall be subjected to comment by stakeholders and the general public for a period of thirty days from the date of issue, and notification for that purpose shall be made through advertisement in at least two daily newspapers of national circulation and in the electronic media.
The following matters have been considered under Section 12A:
Details of other PGNs have been considered under Activity 7.1.6
‘’No action’’ arrangements in place.
One of the ways in which innovation can be supported, irrespective of the sector, is by formalization of a “no-action” approach to proposals for new products or approaches. The case has been advanced for CMA to put in place “no action” arrangements whereby the market can come to CMA and ask for assurance that some action may proceed without the law specifically allowing it.In this regard, CMA has established a Regulatory Sandbox, a form of "no action" arrangement that allows for testing of innovative products, solutions and services that have the potential to deepen or broaden the Kenyan capital markets where such a product, solution or service is not provided within our legal framework.CMA launched the regulatory sandbox on 26 March 2019 to support a variety of FinTech platforms through the publication of a Policy Guidance Note pegged on Section 12 A of the CMA Act.
A more effective and efficient regulatory regime.
The Capital Markets Act was amended through the introduction of Section 12A to allow for principles-based regulation as evidenced by issuance of 5 PGNs (GDR/GDN, ABS,ETF, GB and RS)