7.2: Restructure legal framework for regulation
Combination of regulatory and legislative integration leads to optimum outcome for market users and participants.
The Capital Markets Authority Bill was a key input into the yet to be published FSA Bill. The FSA Bill was approved by Cabinet on 6 April 2017.
Operational Bills (e.g. the Securities, Investments and Derivatives Bill) are expected to be prioritized once the FSA Bill is enacted. As at 31 March 2019, the Authority continues to engage the National Treasury for updates on progress in the publication of the SID Bill.
Revised capital markets legislation.
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 FSA 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 FSA Bill received cabinet approval on 6 April 2017.The Capital Markets Act was 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.
High quality and facilitative legislation.
CMA subjects all regulatory and policy proposals to public exposure and organises sensitisation workshops. CMA has in place 4 working groups that are established under the IC and are responsible for taking on the implementation of actions set out in the Master Plan. The WGs 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 WGs draw upon external expertise provided by international or local consultants.
Engagements with Parliamentary Committee Finance and Planning to fast track capital markets legislation is continuously done as and when necessary.
Proposals to exempt the financial services sector from the requirements of the Statutory Instruments Act were submitted to the National Treasury for consideration in 2016.As at 31 March 2019, CMA is still in engagement with the NT with a view of having the financial service sector legislation exempted from the requirements of the Statutory Instruments Act.
The FLRP is a body that will be composed of leading domestic and international market players that will act as a think tank for early identification of potential legislative gaps that could affect the functioning of financial markets. The FLRP will play a key role in supporting review of financial laws that would also guide the NIFCA once operationalized.
The Board, in January 2018, approved the establishment of the FLRP with members drawn from various fields of expertise that consists of capital markets law, commercial law practice, tax law, Islamic finance, entrepreneurship, domestic/regional Investment banking, financial markets operations, international capital markets practice and legislative drafting.
In February 2019, the Board of the CMA approved appointments of 16 members to the FLRP.
On 29 March 2019 the Board of the CMA, established the FLRP. The list of appointees is as follows:
International Legal Experts:
Habib Motani: Partner, Clifford Chance, London
Steven Galbraith: Partner, Slaughter and May, London
Domestic Legal Experts:
Paras Shah: Partner, Bowmans, Coulson Harney
Fred Ngari: Managing Director, Centum Capital
Kairo Thuo: Partner, Viva Africa, LLP
Islamic Finance Expert:
Rahma Hersi: Partner, Gateway LLP
Domestic and International Financial Markets Experts:
Alison Harwood: Former Global Head/ Practice Manager, Capital Markets and NFBI, World Bank.
Ranjit Ajit Singh: Former Chairman, Securities Commission Malaysia
Naval Sood: Head Corporate Finance, East Africa, Stanbic Bank Kenya
Dr. Robert Barnes: Global Head of Primary Markets and CEO Turquoise, London Stock Exchange Group.
Louise Kabucho: Former Director of Compliance UK and EU
Innovation and Fintech experts:
Elizabeth Howard, CEO Lelapa Fund and Africa Crowd Funding Association
Grant Brooke, Former Chief Executive, Twiga Foods
Domestic Legal Experts:
Mbage Ng’ang’a: Chairman, Kenya Law Reform Commission
Department of Justice
Lilian Matagaro: Deputy Chief Parliamentary Counsel, Office of the Attorney General and Department of Justice.
CMA Board of Directors:
Mr. John Birech: Chairperson, Board Technical and Policy Committee
Mr. Nevis Ombasa: Alternate Director to the Attorney General
CMA continues to engage in different ways to build support in the development of financial expertise in courts as illustrated below: