CMA gears up for launch of derivatives exchange

Money Markets

Mr Paul Muthaura, the acting CMA chief executive. PHOTO | FILE 

By JOHN GACHIRI

The Capital Markets Authority (CMA) is stepping up preparations for the introduction of an exchange for derivatives, which are used for hedging risk.

The CMA has partnered with the Dubai Financial Services Authority to train local players on how the proposed exchange will work.

The derivatives market is one of the key targets for the CMA and so far the regulators has set out the rules for market players.

“The establishment of a vibrant derivatives markets in Kenya is one of the key projects under the Capital Market Master Plan whose delivery is key to deepening the capital market in Kenya,’’ said CMA acting chief executive Paul Muthaura.

He added that the regulators has blended international best practices and local realities in coming up with regulations for the derivatives market.

READ: Derivatives trade on NSE to boost foreign inflows

Kenya’s regulatory framework on the planned exchange, he said, has been aligned to the International Organisation of Securities Commissions principles and takes into account the country’s status as a developing economy.

“The establishment of a derivatives market is expected to attract both domestic and foreign participation and to benefit all sectors of the economy through, among others, providing products to address volatility in interest rates, currency and, in the longer term, volatility in prices of commodities,’’ said Mr Muthaura.

The Nairobi Securities Exchange (NSE) also plans to put up a derivatives market and has in the past run market simulation with brokers.