2.1: Leverage East Africa as an integrated market
The Authority has participated in the development of the EAC Council Directive which are geared to intergrate the capital markets in the region. Seven (7) directives have been gazetted for implementation in the partner states. These include; Council Directives on Regional Listing, Admission to trading on a securities exchange, Asset Backed Securities, Collective Investments Schemes, Corporate Governance for Market Intermediaries, Public offers of Debt and Equity Securities. The Council Directives were gazetted on May 29, 2015 and become effective immediately.In June 2016, the Authority developed Regulations to transpose into our law Council Directives on Regional Listing, Collective Investments Schemes, Corporate Governance for Market Intermediaries and Public offers of Debt and Equity Securities.The draft regulations to transpose the EAC Council Directives were submitted to the National Treasury in 2016 for gazettement.The EAC Council Directives on Licencing, Investor Compensation Funds, Investor Education and Protection, Conduct of Business for Market Intermediaries, Takeovers and Mergers, Anti-Money Laundering and Combating of Financial Terrorism, Self-Regulatory Organizations were gazetted on 27th October, 2017 for transposition by Partner StatesThe Directives currently awaiting gazettement by the EAC for subsequent implementation by Partner States include; Central Securities Depositiries, Securities Exchanges, Corporate Governance for listed companies, Real Estate Investment Trusts, Credit Rating Agencies and Regulated activites. The Authority is also a member of EASRA that promotes cordination and cooperation in capital markets regulation within the region.NSE and CDSC are members of EASEA that addresses emerging issues in exchanges and depository institutions. Nairobi Securities Exchange has been admitted as a full member of the World Federation of Exchanges effective 22nd January 2018. The WFE is a global organisation that works with standard setters, policy makers, regulators and government organisations around the world, to support and promote development of fair, transparent, stable and efficient markets.
Kenya domesticated the regional framework for issuance of fixed income securities in 2015.This is a continuous process. In June 2016, the Authority submitted to the National Treasury draft regulations that transposed EAC Council Directives.In 2016/17 FY, Policy Guidance Note on Asset Backed Securities was issued in February 2017 and the Policy Guidance Note on Global Depository Receipts/Notes was issued in July 2017. This will facilitate both inbound and outbound GDRs/Ns.Regulations on Securities Lending and Borrowing and Short Selling have been developed and are currently awaiting gazettement. Online forex trading regulations published on 25th August 2017 and Gazetted on 1st September 2017 vide LN 226 of 2017.The SLB and Short Selling regulations were gazetted on the 12th of January 2018.
There have been initiatives through the EAC Capital Markets Infrastucture project (CMI) to link the exchange and depository infrastructure. All the necessary policy and administrative documents have been finalised including draft fee structure, smart order router and matching engines rules, master agreements between CSDs and stock brokers, minimum standards for participation, documentation on linkage of CSDs to RTGS systems and capacity building programs. However, currently Kenya is not involved in the project.