• In Kenya, Online Forex Trading is regulated by the Capital Markets Authority under Capital Markets (Online Foreign Exchange Trading) Regulations, 2017.
Image: FILE
The Central Bank of Kenya has issued a warning against dealing with unlicensed and unregulated online forex traders.
In a public notice published in local papers yesterday, the banking regulator said those platforms are downloadable on Google Play and Apple App Store, and aggressively market themselves through social media, promising huge and instant returns.
‘’The purpose of this notice is to warn members of the public against dealing with unlicenced and unregulated online forex dealers. They should only deal with genuine and licenced financial institutions and entities,’’ CBK statement read.
It asked members of the public to report complaints regarding these illegal dealers to the Banking Fraud Investigations Unit.
A spot check by the Star Newspaper on Google App store found a dozen of forex trading apps including Go Forex designed by GoForex 24, FXPesa by EGM Capital, Iron Trding, Forex Game, Trading Signal, Bimono Trade Olymp Trade among others.
‘’Online forex trading works similar to sports betting or live trading on a stock exchange,’’ Kevin Lumbasi a regular trader told the Star.
He explained that one just need to download preferred forex trading app, open and create an account. Those accounts come with an e-wallet where a trader deposits funds using globally acceptable paying cards like MasterCard and Visa Card.
''Once you have cash in your wallet, you can now analyse when to buy or sell on the trading board. One makes profits by buying a currency that gains value in a buy trade and selling a currency that its price drops in a sell trade. Losses occur when the opposite happens,’’ he said.
There is also an option for automatic trade where a trader rents a cloud server with a hosting service provider, activate the automated trading systems and let them trade on your behalf.
When these systems spot a trading setup, they execute a buy or sell trade and manage the trade according to the set rules until it closes with minimum to no human intervention.
In Kenya, Online Forex Trading is regulated by the Capital Markets Authority under Capital Markets (Online Foreign Exchange Trading) Regulations, 2017.
Under the regulation, Forex Brokers are required to maintain a minimum paid up capital of between Sh30 million and Sh50 million while Money Managers are required to maintain a minimum paid up capital of Sh10 million among other requirements.
Kenya’s capital markets regulator (Capital Markets Authority) estimates that about 50,000 people, including brokers, dealers and money managers, are in the business and are mainly using offshore platforms that are not overseen by Kenyan regulators to offer the service.
In April, CMA raised red flag on increasing number of illegal forex traders, with CEO Paul Muthaura warning them of dire consequences.
''The Authority will also take appropriate enforcement action against any persons or entities illegally conducting online foreign exchange trade or collecting client funds in contravention of the above regulatory provisions,” Muthaura said.