4.1: Enhance securities markets
NSE rules were amended in June 2016 to allow market making in the equities market.
Draft SLB regulations finalized and approved by the Board in July 2017 and were progressed to the Attorney for gazettement in August 2017. These are expected to support implementation of market making. Draft regional framework (Code of Conduct and Guidelines) for Government Securities Market Makers (GSMMs) developed in March 2017 by the Regional Technical Working Group and considered by the Monetraty Affairs Committee (MAC) in August 2017. A subsequent meeting of the RTWG will be convened in January 2018 to develop appropriate methodologies for implementing the Code and Guidelines.The National Treasury is leading this initiative on Market Making as part of the 7 point plan on Government Bond Market Reforms. Through the Bond Market Association (BMA) the industry has agreed to adopt the Global Master Repo Agreement 2011 and is in the process of finalizing a Kenyan Annex to the GMRA. Also through the Bond Market Steering Committee (BMSC) the industry is in the process of implementing an OTC trading platform which will have capabilities for two-way quotes and trade reporting and BMA has developed draft rules which are under review.
The SLB regulations were gazetted on 12th January 2018. These are expected to support market making for the government bond market.
Draft SLB and Short Selling regulations finalized and approved by the Authority's Board in July 2017 and have been progressed to the National Treasury for gazettement.The SLB and Short selling regulations were gazetted on 12th January 2018.
The first benchmarking study was conducted in October 2018. A second benchmarking study tour is scheduled in the 3rd quarter of FY 2018/2019. The objective of the study is to identify the best model for implementation of SLB. The regulations had envisaged a bilateral arrangement but some industry participants are supportive of a centralized arrangement. A hybrid model is likely to be adopted.
Draft SLB regulations finalized and approved by the Board in July 2017 and have been progressed to the National Treasury for gazettement.The SLB and Short selling regulations were gazetted on 12th January 2018.
Consultations to be undertaken once the SLB Regulations are gazetted.Following the gazettement of the SLB Regulations, the Authority is to commence engagement with the Regulators in the last quarter of FY 2017/2018.
CDSC have submitted the draft operational guidelines for Securities Lending and Borrowing to the Authority in June 2017.To be reviewed once the SLB regulations are gazetted.Engagements are ongoing on CDSC SLB Rules.
CDSC has made consolidated amendments to its procedures this year 2017 to remove the requirement for pre-validation of funds and awaiting approval from the Authority.CDSC and NSE modernisaton currently on going.
The Authority developed the draft policy framework on DMA in July 2017 and the NSE has submitted its rules for approval in the next board meeting. Detailed guidelines on operationalisation of DMA to be submitted by NSE.The DMA operationalization guidelines have been submitted by NSE to the Authority and are currently under review.
A concept paper on block trading to guide stakeholder consultations was developed in March 2017.Stakeholder consultation meeting (which comprises of members of working group 2&3) was held in September 2017.Stakeholder engagment with Fund Managers Association and KASIB to be held in January 2018.The 2nd stakeholder engagement with fund managers and KASIB was held in February 2018.Following stakeholder engagements, the market participants were of the view that re-introduction of block trading was not feasible due to the low liquidity levels in the market. The activity has been reprioritized until high levels of liquidity are realized through operationalization of Securities Lending and Short Selling.
The process to setup an SRO as a market organiser is ongoing and the OTC Link Plc was registered on 10th August 2017.Draft OTC rules under stakeholder consultation which will inform the Trade Reporting System specifications. A consultancy has been undertaken for review of legal framework to support insolvency netoff and settlement finality and a final report submitted to the Authority in September 2017. The report recommended amendments to the Capital Markets Act, Kenya Deposit Insurance Act, Insolvency Act, Insurance Act and the Central Bank Act. The ammendments are to be effected by June 2018.A Hybrid Bond Market consultant (FDHL-Salonica) on boarded to support the Authority in developing the regulations, rules and operational guidelines to support effective and transparent bond trading operations. The Consultants have submitted the draft inception report and feedback given by the Authority. On the other hand, Kenya Bankers Association in partnership with FSDA is in the process of developing a business plan for the SRO (Market Organizer).
In Q2 2018/19, the consultant submitted 2 reports as follows:
The reports have been reviewed internally and comments incorporated by the consultants. A validation workshop targeting key bond market stakeholders is scheduled to be held in the 3rd quarter of FY 2018/2019 with the primary objective of appraising them on the progress and building consensus on the implementation plan as well as identifying any capacity gaps.
This is yet to be commenced.
A PGN developed and published in July 2017. NSE to commence engagement with potential issuers.
Has been reprioritised awaiting implementation of SLB.
NSE demuatilised and self listed on 9th September 2014.
The new brand of NSE was launched on April 7th 2014.
The Authority is currently developing a paper for consideration by the National Treasury in Q1 2018.
All approval processes by the Authority have been streamlined and requirements published on the website for transparency since 2013.
Trading participants access fees to NSE platform reduced from 250 million to 25 million in 2014. Trading participant rules put in place with effect from June 2014 to provide an admission criteria for admission of new participants.
The Authority in collaboration with the industry organised the first business incubator and accelarator on the listing experience in March 2017 and has identified 40 potential issuers.The Authority is in continous engament with the idenfied potential issuers.
The listing application procedure was published on the website in 2013.
The Companies (Ammendment) Act No. 28 of 2017 is in place which has made registration of companies more efficient and streamlines obligations of listed companies.Below are some of the changes made by the Act:
The Capital Markets (Foreign Investors ) regulations was revised vide Legal Notice no. 134 of 2015 to remove the cap with the Cabinet Secretary having discretion to prescribe caps on companies deemed to be of national strategic importance.The Finance Act 2016 amended the Companies Act by deleting the requirement that all foreign companies in Kenya should have 30% shareholding by Kenyan citizens.
Policy Guidance Notes on Global Depositary Notes /Receipts issued in July 2017.
Policy Guidance Notes on Global Depositary Notes/Receipts issued in July 2017. The framework caters for both inward and outbound GDR/N.
5 GEMS listed at the Exchange to date against a target of 12 listings. Initiatives to promote listing ongoing e.g. the business incubator and accelerator experience. A study was undertaken with the partnership of CMA, NSE and FSD Kenya on the strengthening of the GEMS market in September 2015 and the recommendations are progressively being implemented.