The Capital Markets Authority located on Embankment Plaza, 3rd Floor Longonot Road, off Kilimanjaro Avenue, Upper hill is an independent public agency established by an Act of Parliament, Cap 485 A under the Ministry of Finance. It plays a critical role in the economy by facilitating mobilization and allocation of capital resources to finance long term productive investments. The board of directors of the Authority is headed by a Chairman appointed by the President on the recommendation of the Minister of Finance, six other members appointed by the Minister, the Permanent Secretary to the Treasury or a person deputed by him, the Governor of the Central Bank of Kenya or a person deputed by him, the Attorney General or a person deputed by him, the Chief Executive of the Authority.
The regulatory functions of the Authority include the following:
- Licensing and supervising all the capital market intermediaries
- Ensuring proper conduct of all licensed persons and market institutions.
- Regulating the issuance of the capital market products (bonds, shares etc )
- Promoting market development through research on new products and institutions.
- Promoting investor education and public awareness
- Protecting investors’ interest
Legal and Regulatory Framework
Just like any other industry, the capital markets industry operates within a certain regulatory framework which the players in this industry must adhere to in the course of offering their services. Since inception, the Authority has strived to deepen and broaden the capital markets by developing a regulatory framework that facilitates the development of new financial products and institutions through research and ensuring fairness and orderliness in the capital markets industry. The regulatory framework of the Authority is comprised of the following:
- The Capital Markets Act;
- The Central Depositories Act, 2000
Regulations and Rules
- The Capital Markets (Collective Investment Schemes) Regulations, 2001
- The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002
- The Capital Markets (Licensing Requirements) (General) Regulations, 2002
- The Capital Markets (Takeovers and Mergers) Regulations, 2002
- The Capital Markets (Foreign Investors) Regulations, 2002
- The Capital Markets Tribunal Rules, 2002
- The Capital Markets Asset Backed Securities Regulations 2007
- The Capital Markets (Registered Venture Capital Companies) Regulations 2007.
- Guidelines on Corporate Governance Practices by Public Listed Companies
- Guidelines on the Approval and Registration of Credit Rating Agencies
The above Acts, Regulations as well as the Guidelines are what the Authority uses to supervise and regulate the market intermediaries. The regulatory framework is crafted in such a way that it encourages self regulation to the maximum practical extent.
Licensing and Approval policy of CMA
In order to regulate and supervise the capital markets industry in compliance with the Capital Markets Act and regulations, all applications received by the Authority are broadly classified into two categories for purposes of review;
- Applications for license
- Applications for approval