In July 2019, FSVC launched a program of technical assistance with the Capital Markets Authority of Kenya (CMA), with support from the National Treasury of Kenya and the World Bank’s Financial Sector Support Project, to develop a multi-asset surveillance system in Kenya that can overhaul the surveillance capacity of the CMA as the regulator of the Kenyan capital market.
Kenya’s capital market is introducing reforms, such as the new automated trading systems at the Nairobi Securities Exchange and the new central depository system at the Central Depository & Settlement Corporation. Additionally, Kenya is rolling out new products to enhance market liquidity, such as securities lending and borrowing and short selling, among other products. These significant changes will require an overhaul of the CMA’s surveillance capacity to protect investors and ensure orderly, fair and efficient market activity.
To meet these rapidly changing market needs, FSVC is working with the CMA to conduct a detailed review of its current surveillance capacity, and to design a multi-asset surveillance system that will meet the current and future needs of the CMA. FSVC is also strengthening the CMA’s existing technology infrastructure for surveillance, in order to address and complement changes to the regulatory environment and associated compliance requirements. Specifically, FSVC’s program has three main objectives:
1. Review the regulatory framework for surveillance and current surveillance system capacity;
2. Design the specifications and support the procurement of a multi-asset surveillance system; and
3. Implement a capacity-building training program for the introduction of the multi-asset surveillance system.
To date, FSVC’s program has helped the Kenyan CMA:
- Review current surveillance practices of the Kenyan capital markets; and
- Design specifications for a new multi-asset surveillance system that will be procured to help Kenya protect investors and ensure the integrity of its capital markets.
Ultimately, adopting international best practices in market oversight and surveillance techniques, such as the introduction of a multi-asset surveillance capability, will help ensure the safety and soundness of the capital market, particularly as initiatives to improve liquidity are implemented.