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2025-01-01

The Capital Markets (Licensing Requirements) (General) Regulations, 2025

These regulations establish a comprehensive licensing and operational framework for diverse capital markets intermediaries including securities exchanges, investment banks, and digital platform providers in Kenya. They mandate strict capital adequacy, reporting, and fit-and-proper governance standards to ensure market integrity and investor protection across the industry. The document also details specific fee structures and transitional provisions for existing licensees to comply with these updated regulatory requirements.

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Capital Markets Authority Kenya

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The Capital Markets (Licensing Requirements) (General) Regulations, 2025

[Full text extracted from pages 4-30 as follows]

PART I - PRELIMINARY PROVISIONS

  1. These Regulations may be cited as the Capital Markets (Licensing Requirements) (General) Regulations, 2025.
  2. In these Regulations, unless the context otherwise requires, terms such as "beneficial owner," "broker-dealer," "custodian," "demutualization," "investment advisor," "intermediary services platform," and "liquid capital" are defined to provide clarity for licensing requirements.

PART II - SECURITIES EXCHANGES AND OVER-THE-COUNTER PLATFORMS

  1. Persons wishing to operate a securities exchange must apply for a license with a paid-up capital of one billion shillings.
  2. Each securities exchange must be demutualized. 5-10. Regulations cover rules, ownership limits, governance (CEO and board structure), approval of trading systems, and rigorous reporting obligations.
  3. Over-the-counter platforms also require specific licensing and adherence to a code of conduct.

PART III - INVESTMENT ADVISORS

12-15. Investment advisors must be licensed, maintain professional indemnity insurance, and, for algorithm-driven platforms, comply with additional robust data protection and risk management frameworks.

PART IV - INVESTMENT BANKS

16-20. Applicants require 150 million shillings in paid-up share capital and must be non-deposit taking; they may engage in corporate finance, underwriting, and portfolio management services.

PART V - BROKER-DEALERS

21-24. Requirements for broker-dealers include 70 million shillings in paid-up capital and specific functional and reporting obligations.

PART VI - STOCKBROKERS

25-29. Stockbrokers must maintain 50 million shillings in paid-up capital and act only as agents for investors.

PART VII - DEALERS

30-33. Dealers require 20 million shillings in paid-up capital and may trade on their own account.

PART VIII - INTERMEDIARY SERVICE PLATFORM PROVIDERS

34-36. Providers must maintain agreements with licensed intermediaries, provide detailed business plans, and follow specific reporting and cessation procedures.

PART IX - FUND MANAGERS

37-40. Fund managers must hold 20 million shillings in shareholder funds and adhere to strict portfolio reporting requirements.

PART X - CUSTODIANS

41-45. Custodians must be licensed banks or financial institutions with significant capital and must act with professional prudence in holding client assets.

PART XI - TRUSTEES

46-48. Trustees must be incorporated in Kenya, hold at least 20 million shillings in capital, and ensure scheme management complies with fund documents.

PART XII - GENERAL REQUIREMENTS

49-57. Covers processing of applications, grant of licenses, payment of fees, and rigorous "fit and proper" standards for personnel.

PART XV - TRANSITIONAL AND REVOCATION PROVISIONS

58-59. Existing licensees have 12 months to comply with new requirements; the previous regulations are revoked.

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