Till now, Forex trading in Kenya was not subject to strict regulations. However, Kenyan watchdog CMA decided to finally take measures.
4 July, AtoZForex – Current Forex regulation in Kenya is not sufficient to properly oversee the financial activities of market participants. In fact, as of now, there are about 80,000 Kenyans trading without any strict regulatory norms. However, this soon might change – the Kenyan Capital Markets Authority (CMA) has drafted a new Forex legislation.
New rules for Forex trading in Kenya
Forex trading in Kenya is can soon be regulated. The CMA has drafted the new regulatory rules for financial markets in Kenya. The new Forex rules will ban cash transactions between customers and online Forex traders in favor of independent bank accounts. Moreover, it will prohibit the opening of direct Forex account overseas for individual or Kenyan company in favor of ledger accounts held by Forex traders with the license.
This step brings CMA closer to the proper ability to monitor the movements of money in Kenya. The drafted law also states that only licensed companies will be able to trade Forex abroad.
Moreover, the new proposed law for Forex trading in Kenya outlines the acceptable minimum capital limit. As per the draft, Forex small traders should have a minimum of Sh50 million in the capital limit. Moreover, the draft calls for a minimum of Sh40 or 80 percent of their capital reserves in financial instruments at all times. The official document states:
“For foreign-based online brokers, they must provide an undertaking that they shall locate the prescribed capital to support their activities in Kenya.”
All Kenyan brokers will need to register with CMA
The strategy director of CMA, Luke Ombara, has stated that the new law for Forex trading in Kenya would allow the country to consolidate its regulatory stance. Specifically, the Kenyan authorities now will be able to not only license the brokers but also obtain information on all financial activities to protect Kenyan investors. Mr. Ombara has stated:
“We shall be able to get quarterly, bi-annual and annual reports on all forex activities that have for long remained unregulated. We now have a sizeable number of players, at about 80,000 individuals, but the forex dealers have remained in the shadows.”
Presently, Kenyan authorities are not aware of how much money is in circulation in Forex online business in Kenya. As a matter of fact, Forex trading in Kenya is growing at a high speed, thus raising concerns for regulators in the country.
If the law will pass the government, all Forex brokers will need to obtain a license from CMA. Moreover, all of the firms will need to prove their competence levels. They also will need to make sure to comply with all the requirements. The draft of the new rules for Forex trading in Kenya states:
“A shareholder, director and all key personnel of the applicant shall be persons who have not defaulted in payment of dues at any securities exchange, clearing house, central bank or any bank.”
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