CMA pushes for stocks trade on mobile phones

The Capital Markets Authority (CMA) is proposing to completely transform transactions in shares and bonds into electronic or e-mobile platforms. FILE PHOTO | NMG 

By GEOFFREY IRUNGU
More by this Author

Summary

• The Capital Markets Authority (CMA) is proposing to completely transform transactions in shares and bonds into electronic or e-mobile platforms where clients use phones for registration, trading and receiving cash.
• This is intended to cope with situations like the current Covid-19 pandemic where many people are confined at home and have difficulty carrying out stock market transactions without meeting brokers or investment advisers.
• The idea implies clients do not have to show up at a stockbroker or the Central Bank of Kenya for registration as investors or to transact and get paid.

The Capital Markets Authority (CMA) is proposing to completely transform transactions in shares and bonds into electronic or e-mobile platforms where clients use phones for registration, trading and receiving cash.

This is intended to cope with situations like the current Covid-19 pandemic where many people are confined at home and have difficulty carrying out stock market transactions without meeting brokers or investment advisers.

The idea implies clients do not have to show up at a stockbroker or the Central Bank of Kenya for registration as investors or to transact and get paid.

Currently, to register for transacting in bonds, for example, even the mobile-based bond trading, requires physical presence at the initial point with a considerable amount of paperwork.

“It may be the right time to start thinking about completely transforming capital markets transactions into e-mobile where clients are on-boarded, trade and receive cash through their mobile handsets,” said CMA’s Capital Markets Soundness report.

The other proposal is to allow online annual general meetings (e-AGMs) for capital market players and that this concept be tested in sandbox to inform future approach.

Last week, Scangroup

had to seek court intervention for a virtual AGM.

The sandbox is a novel approach that was started by the CMA in March last year to recruit fintech firms to test innovations, solutions and services in a live fashion.

The firms are given a 12-month period to deploy and conduct live-tests, a development that would also accelerate CMA’s understanding of emerging technologies, support adoption of an evidence-based approach to regulation and facilitate deepening and broadening of Kenya’s capital markets.

“There is need to explore viability of Electronic Annual General Meetings (e-AGMs) for capital market intermediaries in Kenya. This concept can be tested in the CMA regulatory sandbox to inform future approach,” Soundness report.

The report also recommended listed companies adopt business continuity measures as well as include effects of the Covid-19 in business plans and projections.