13 March 2017
Nairobi
Reporter: Drew Nicol

Kenyan securities lending drive gains international support


Kenya’s capital markets liquidity drive received another boost last week as the country’s Capital Markets Authority (CMA) looked to diversify available financial products with the help of several international bodies.

Securities lending was once again highlighted as an area of Kenya’s capital markets that should be developed in order to improve overall market liquidity and continue the forward momentum enjoyed in recent years.

CMA chief executive Paul Muthaura said: “After a comprehensive review and analysis of the securities market, the CMA has identified several areas for improvement, including securities lending and borrowing, strengthening of collective investment schemes (CIS) reporting and structuring and, in line with the ambitions of the 10-year Capital Market Master Plan, positioning Kenyan securities and the overall market for inclusion in the right market indices.”

“This week’s [7 March] consultations are an important first step in building the capacity of the CMA and market participants to develop new products and services that will enhance liquidity.”

Despite recent market growth, the CMA has acknowledged several challenges remaining in the market’s landscape including the need for stronger market infrastructure and increased diversification of financial products.

According to the CMA, new and improved services are vital to cater to the growing needs of investors and issuers, and the need to improve the level of awareness among potential and existing investors regionally and internationally.

To further these aims, the CMA has partnered with the US Securities and Exchange Commission, the Financial Services Volunteer Corps (FSVC) and Bloomberg, along with other industry stakeholders.

FSVC is a not-for-profit organisation that deploys volunteer experts to emerging market countries to help strengthen financial sectors.

As part of the collaboration, representatives from these entities met with CMA officials and Kenyan market regulators to present international best practices in adopting and implementing securities lending and CIS transparency.

The move to introduce securities lending into the Kenyan market first began to gather pace in October 2016 when the CMA, in conjunction with the World Bank, open its finalised capital markets regulation to enable securities lending and short selling for feedback from market players.

The latest version of the regulation outlines internationally recognised standards for appropriate lending behaviour such as the need for collateral provided to value at least 100 percent of the securities lent.

Bloomberg LP chairman Peter Grauer added: “Stronger trade and investment ties between the US and African countries are mutually beneficial, and East Africa is a region of enormous strategic importance as well as economic potential.”

FSVC president and CEO Andy Spindler stated: “Drawing upon FSVC’s significant expertise in the area of capital markets development, these consultations will help enable the CMA to develop new products and undertake key reforms to improve liquidity.”

“Robust capital markets play a critical role in sustainable economic development by mobilising domestic savings and foreign capital for longer-term, productive investment.”

“Kenya has already made significant strides in this area, and, thanks to the support of Bloomberg, FSVC will help the CMA establish a vibrant and competitive financial sector driving economic growth in the region.”

More news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Hedge funds continue to attract inflows, says J.P. Morgan survey
23 February 2018 | London | Reporter: Brian Bollen
Hedge funds continue to attract inflows, according to a J.P. Morgan 2018 Institutional Investor Survey
SEC votes to extend compliance date for liquidity classification
23 February 2018 | Washington DC | Reporter: Jenna Lomax
The deadline, which will be extended by six months, will provide funds additional time to complete implementation of the final rule's classification requirement
ISDA releases best practice for margin call issuance and response
23 February 2018 | London | Reporter: Jenna Lomax
The ISDA CIC examined the minimum set of fields which is required to communicate the issuance of a margin call, as well as the expected response of a margin call
ESMA gives SSR technical advice
23 February 2018 | Brussels | Reporter: Brian Bollen
Verena Ross, executive director at the ESMA, addressed the Economic and Monetary Affairs Committee of the European Parliament to discuss elements of the short selling regulation
Saxo Bank sees positive growth in 2017
23 February 2018 | Copenhagen | Reporter: Jenna Lomax
Saxo Bank’s reported 33 percent increase in net profit follows the sale of its subsidiary Saxo Privatbank earlier this month
ROBO appoints BNY Mellon as custodian and sec lending agent
22 February 2018 | New York | Reporter: Brian Bollen
ROBO Global, creator of the world’s first ETF to track the global RAAI sector, has selected BNY Mellon to provide the firm with custody and transfer agency services
FCA launches call for input on use of technology for regulation
22 February 2018 | London | Reporter: Jenna Lomax
The Financial Conduct Authority is seeking views on how technology can make it easier for firms to meet their regulatory reporting requirements and improve the quality of the information they provide