Inside CMA’s products innovation pipeline

There are seven firms testing products in the Capital Markets Authority’s regulatory sandbox with another 15 in the pipeline having applied to the markets regulator for admission to the platform. 

This is according to CMA’s manager for corporate approvals, Nyale Yanga, who says that a year and a half since launching, the regulatory framework promises to enhance product diversification in Kenya’s capital markets.

“There are quite a number of innovations which come our way. Blockchain and crypto assets are just a small sub-set of what the entire horizon of applications we receive looks like. We have been testing things to do with securities lending and borrowing, we have been testing crowd funding platforms, and also tokenisation of assets,” Mr Yanga says.

The CMA argues that whereas the Kenyan Sandbox is not backed by tax incentives unlike peer frameworks in jurisdictions such as Singapore, this has not presented a setback to the appetite for innovation by various entities.

“Different countries adopt different regulatory approaches and so we cannot replicate what other countries are doing by way of creating incentives. From the experience we have, entities coming to test various ideas are more concerned about whether the ideas will make a compelling business case and only peripherally about whether they are being offered incentives,”Mr Yanga says.

The Central Depository and Settlement Corporation is one of the entities which received the regulator’s green light to roll out the pilot phase of its innovation, securities lending and borrowing, in August 2020.