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Kenya: CMA - Brokers Don't Pose Threat to Invested Funds
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Business Daily (Nairobi)
28 April 2008
Posted to the web 28 April 2008
Washington Gikunju
The Capital Markets Authority (CMA) has moved to assure investors that stockbrokers currently operating under conditional licenses do not pose a serious threat to invested funds.
The authority said it had extended licenses for six stockbrokers and two investment advisers for a three months period, as it gives them more time to fully comply with the regulator's licensing requirements.
"The circumstances leading to the extension of the licences for these firms do not pose serious risk to investors or clients of these firms and the capital markets industry in general," read an unsigned statement issued through CMA's public relations firm, Gina Din.
Stockbrokers who have been issued with the three month conditional licences include Crossfield Securities, Discount Securities, Ngenye Kariuki and Company, Solid Investment Securities, Reliable Securities and Bob Mathews. Two investment advisory firms issued with similar conditional licenses are Franklin Management Consultants and WSD Capital Kenya Limited.
The regulator says that it acted within its powers by extending the stockbrokers' licenses for three months and the licensees now have up to May 26 to provide evidence of full compliance with the regulator's rules.
"The decision to extend the licenses was made on February 26 and communication made to these firms. The firms in question therefore have approximately one month to ensure full compliance," the statement said.
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Through a Kenya Gazette notice dated Friday last week, CMA either approved or renewed licenses for 84 firms.
The matter was covered exclusively in yesterday's issue of Business Daily. CMA has stepped up its surveillance over stockbrokers following the collapse of a stockbrokerage firm (Francis Thuo and Partners) and the placement of another (Nyaga Stockbrokers) under statutory management in a space of less than 12 months.
Concern has also been raised that some brokers are living off their clients' money by selling their shares without their authorisation, while others were failing to effect instructions promptly or pay proceeds at the end of five days as required under NSE regulations.Several of them are also in arrears in remitting statutory dues to the NSE, CMA and the Central Depository and Settlement Corporation.
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