7.2: Restructure legal framework for regulation
The Capital Markets Authority Bill was a key input into the yet to be published Financial Services Authority Bill. The FSA Bill was approved by Cabinet and is still being reviewed by the State Law Office.Operational Bills (e.g the Securities, Investments and Derivatives Bill) are expected to be prioritized once the FSA Bill is enacted. The Authority will continue to follow up with National Treasury for updates on progress in the publication of of the FSA Bill and the SID Bill.Both the CDSC and CBK CSD are yet to submit their self-assessment reports on compliance with the PFMIs.
The frameworks are reviewed on an ongoing basis.The Authority in 2012 finalized the development of the Capital Markets Authority Bill and the Securities Investments and Derivatives Bill to address the gaps identified and to ensure that Kenya's securities legislation meets international standards following an IOSCO benchmark review in 2010.In 2013, a Presidential Task Force report on Parastatal Reforms recommended the consolidation of financial sector Regulators and a Financial Services Authority Bill was developed which seeks to establish an Authority with the mandate of regulating the capital markets, insurance, pensions and Sacco sectors. The Bill has incorporated the IOSCO principles on securities regulation. The Bill is yet to be submitted to Parliament.The Capital Markets Act has been amended in 2013 and 2016 to provide for inter alia-derivatives, principle based regulation, refinement of provisions dealing with Asset Backed Securities and Public Offers, expansion of the mandate of the Authority to regulate Online forex trading and Commodities markets.The various amendments to the Act comprise at least 80% of amendments recomended in 2010 IOSCO benchmark review and what is contained in the Capital Markets Authority Bill, 2011 and the Securities, Investments and Derivatives Bill which were developed subsequent to the review.
The Authority subjects all regulatory and policy proposals to public exposure and organises sensitisation workshops. The Authority has in place 4 working groups that are established under the Implementation Committee and are responsible for taking on the implementation of actions set out in the Master Plan. The working groups comprise of representatives from relevant industry associations, market infrastructures, departments within various financial sectors regulators and a host of other market participants. At times the working groups draw upon external expertise provided by international or local consultants.
Engagements with Parliamentary Committee Finance and Planning to fast track capital markets legislation is continously done as and when necesary.
Proposals to exempt the Financial Services Sector from the requirements of the Statutory Instruments Act submitted to the National Treasury for consideration in 2016.
The proposal for the establishment of the Financial Law Review Panel has been revised in accordance with the Authority's Board's guidance. To be submitted to the next board meeting in January 2018.The proposal for the establishment of the Financial Review Panel was approved by the Board in January 2018. Establishment of the Panel is underway.
There is an ongoing engagement with the Judiciary for capacity building.The FSA bill provides for the Financial Services Sector Tribunal.