by Ronald Njoroge
NAIROBI (Xinhua) -- Kenya has
finalized plans to launch the derivatives markets in July,
officials said on Wednesday.
Rufus Kariuki, manager of
derivatives in the Nairobi Securities Exchange (NSE), told
journalists in Nairobi that the contracts to be traded will be
based on the NSE 25 Index as well as seven blue chip stocks.
"We also have in place two banks that will act as clearing
houses for settling trading accounts and confirming trades in
real time," Kariuki said.
Derivatives are financial instruments whose characteristics
and value depend upon the characteristics and value of an
underlying asset which is typically a commodity, bond, equity or
In May, the Capital Markets Authority gave the NSE regulatory
approval to launch the Derivatives markets.
Kariuki said that the derivatives will be settled at the end
of each trading day to reduce risk of default by investors.
He noted that there is demand for the product in Kenya
because it will enable investors to buy or sell derivatives to
manage the risk associated with the underlying security, to
protect against fluctuations in value, or to profit from market
In order to operationalize the derivatives markets, the NSE
has set aside 130 million shillings (1.27 million U.S. dollars)
for the Settlement Guarantee Fund that will insure investors
against counterparty default risk.
He added that derivatives markets will help to deepen the
capital markets by allowing investors to make returns when the
securities markets rise or fall.
He revealed that the trading fees for single stock futures
will be 0.17 percent, while fees for index futures will be 0.14
percent on the value traded compared to the trading fees on
shares which range between 1 and 2 percent.
Kenya Capital Market
Authority and the Kenya Association
of Manufacturers sign 'MoU' to boost manufacturing sector
NAIROBI (Xinhua) --
Kenya’s Capital Market Authority (CMA) and the
Kenya Association of Manufacturers (KAM) on Thursday signed a
memorandum of understanding (MoU) to boost the manufacturing
CMA CEO Paul Muthaura told a media briefing in Nairobi that
capital markets are an alternative source of affordable and long
term finance that is largely untapped.
"The agreement will be instrumental in catalyzing policy
formulation and product development aimed at fueling the growth
of manufacturing through responsive financing through the
capital markets industry," Muthaura said.
Through the agreement, the capital market regulator and the
manufacturing lobby will collaborate to identify and analyze
funding gaps, institutional challenges and key impediments in
the manufacturing sector and collaborate on implementing
solutions to the same.
"The partnership will enhance our ability to examine the
strategies to create a pipeline of issuers of traditional and
new capital market products to support manufacturing sector.
"This may include a review and possible revision of existing
eligibility and disclosure requirements in order to attract
large and family-owned companies as well as small and medium
enterprises," he noted.
Muthaura said that the manufacturing sector is a critical
industry which needs to be supported by all relevant
stakeholders because of the critical role it plays in employment
Phyllis Wakiaga CEO of KAM said that the partnership will
have a reverberating effect throughout industry and respective
value chains for years to come.
"This collaboration also comes at a time when manufacturing
has been identified as a key pillar in the economic agenda of
the country and will be a catalyst towards increasing the gross
domestic product contribution of the sector from the current 7.7
percent to 15 percent by the year 2022," Wakiaga said.
Kenya keen to broaden
co-operation with China
over financial technology development
NAIROBI (Xinhua) --
Kenya and China’s capital market regulators are
set to hold discussions on how financial technology (fintech)
can help accelerate economic development in Kenya, an official
Paul Muthaura, chief executive officer of Capital Market
Authority (CMA) told Xinhua in Nairobi that Beijing has the
largest and most vibrant technology driven financial sector in
"Kenya is keen to exchange ideas with China from a regulatory
perspective on how to create a conducive environment for the
accelerated development of the fintech sector so that it becomes
a catalyst of economic growth," Muthaura said on the sidelines
of the signing ceremony of the memorandum of understanding (MoU)
between CMA and the Kenya Association of Manufacturers (KAM).
Early this week, financial sectors regulators from China and
Kenya held fruitful talks in Nairobi on cooperation in the
Muthaura said that in September, a team from CMA is expected
to visit China to hold talks with their Chinese counterparts on
partnering on the fintech sector.
He said that Kenya is keen to borrow lessons from China on
how it can deepen and broaden its capital markets by leapfroging
through the use of technology.
He revealed that China is a role model in the area of fintech
because the Asian nation has used technology to democratize
access to financial services and has also identified how wider
sectors of the economy can be supported by technology.
He noted that China has an interesting regulatory model in
the fintech space where there is industry self regulation with
the participation of policy makers and regulatory agencies.
According to Muthaura, most of the fintech solutions in Kenya
have components that fall under the regulators of the insurance,
pension, banking sectors.
The capital market regulator is keen to deploy a broad based
approach to the management of fintech solutions due to the
presence of different sectoral regulators and there is currently
not single voice in the fintech sector.