[Kenya] Securities lending and borrowing expected to enhance liquidity in capital markets
The Capital Markets Authority (CMA) has lauded the Cabinet Secretary to the National Treasury for the gazettment of the Capital Markets, Securities Lending, Borrowing and Short-Selling, Regulations 2017, which are expected to facilitate enhanced liquidity in the capital markets.
Speaking while confirming the new development, the CMA Chief Executive, Mr Paul Muthaura said, ‘’Making the Kenyan capital markets highly vibrant and liquid is a key priority for the capital markets industry and the Securities Lending, Borrowing and Short-Selling Regulations are expected to facilitate this’’.
Mr Muthaura further observed that this new development is one of the recommendations of a 2015 World Bank-supported study on the state of liquidity in Kenya which recommended several measures to improve liquidity.
Some of the proposals included: introduction of market makers, removal of pre-funding and pre-validation checks, introduction of circuit breakers instead of price bands, Securities Lending and Borrowing (SLB) and Short Selling.
Among the key initiatives which the World Bank Report recommended for immediate implementation was the introduction of Securities Lending and Borrowing (SLB) as well as Short Selling.
Mr Muthaura added that the initiative is aligned to the Authority’s mandate of promoting the development of Kenya’s capital market to be an investment destination of choice through facilitative regulation and innovation as anchored in the Strategic Plan (2013-2017) and Capital Market Master Plan (2014-2023).
He explained that in the pursuit of this mandate, CMA has been implementing regulatory reforms as well as introducing new products and services aimed at deepening, diversifying and strengthening the securities industry.
Recent developments include the publication of Policy Guidance Notes for Exchange Traded Funds & Policy Guidance Notes for Asset-Backed Securitization; the implementation of a cross-sectoral program on Islamic Finance development and the implementation of a new Code of Corporate Governance Practices among others.