The Capital Markets Authority has announced the publication of a draft Regulatory Sandbox Policy Guidance Note (Regulatory Sandbox PGN) which will facilitate the admission of fintech firms to a Regulatory Sandbox, as outlined in the CMA Strategic Plan 2018-2023. The PGN sets forth the eligibility, application, safeguard, and testing requirements for applicants.
A Regulatory Sandbox is a tailored regulatory environment that allows firms deploying innovative products, solutions and services to conduct live tests for their innovations within a limited scale. The innovations to be tested should have the potential to deepen and develop Kenya’s capital markets.
‘The Regulatory Sandbox is intended to help accelerate the Authority’s understanding of emerging technologies and support evidence-based approaches to regulation that advance the goals of capital markets deepening and development; and investor protection in line with the 10-year Capital Markets Master Plan,” said CMA Chief Executive Paul Muthaura.
It is available to firms incorporated in Kenya, other East African States and countries whose securities market regulators have entered into Memorandum of Understanding with CMA. The initial testing period for financial technology firms admitted to the Regulatory Sandbox shall be determined through consultations between the Authority and applicants, however, the testing period shall be twelve months subject to an extension by CMA. Applicants will be required to pay to the Authority Ksh10,000 upon submission of application forms.
‘The publication of the Regulatory Sandbox PGN is a critical milestone towards fostering and promoting the responsible growth of fintech by providing a supportive regulatory environment where promising innovations can operate, subject to restrictions on client access and investment size,” added Mr Muthaura.
The Regulatory Sandbox underpins CMA’s efforts to build capacity to respond to the impact of and support the implementation of new technologies in the capital markets value chain. It is hinged on the regulator’s strategic objective of leveraging technology to drive efficiency in the capital markets value chain.
The Regulatory Sandbox provides reduced time-to-market at potentially lower costs, better access to finance, more innovative products reaching the market and contained consequences of failure as a result of restrictions on client access.
Mr. Muthaura added, “supporting Fintech through the Regulatory Sandbox will call for stronger coordination with other financial sector regulators to ensure that there are no gaps or overlaps and that scalable solutions touching on multiple sectors are able to be put in place where necessary.”
The regulators under the Joint Financial Sector Regulators’ Forum are working to establish a Fintech support facility that has a dedicated personnel to facilitate timely follow up and resolution of inquiries on Fintech products and services.
The CMA, with support from the Financial Sector Deepening Kenya (FSDK), on-boarded consultants to finalise a policy framework on the Regulatory Sandbox. Consultants also conducted a landscaping study aimed at establishing the status, size and the relevant Fintech firms whose innovations are aligned to the Authority’s regulatory sandbox initiative with the potential to revolutionise how financial products and services are offered and taken up in the country. The findings from the study formed the basis upon which the PGN was developed.
Other capital markets regulators that have established Regulatory Sandbox frameworks include United Kingdom Financial Conduct Authority, Australian Securities and Investments Commission, Monetary Authority of Singapore and Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market.
The Policy Guidance Note is open for scrutiny by stakeholders and the general public, for 30 days to 20 January, 2019 in line with the Constitution of Kenya which prioritises effective public participation in the policy-making process.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.