- The two new licensees, HFM Investments Limited and Windsor Markets (Kenya) Limited lift the number of entities in the forex trading space to six.
- The first trader in the forex trading space was licensed in 2018.
The Capital Markets Authority has licensed two non-dealing online trading brokers, in a bid to grow online trading while curbing fraud.
The two new licensees, HFM Investments Limited and Windsor Markets (Kenya) Limited brings the number of online forex brokers to six.
The licenses were issued pursuant to the Capital Markets Act, Cap 485A and the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017.
“The Authority is pleased to grow the pool of licensed entities that can offer non-dealing online foreign exchange trading services to investors,” said CMA Chief Executive Wyckliffe Shamiah .
As non-dealing online foreign exchange brokers, the entities are licensed by the Authority to act as a link between the online foreign exchange market and a client in return for a commission or mark-up in spreads.
The licensees do not engage in market-making activities (buying and selling of foreign currencies).
They provide their clients with access to trading platforms, enabling them trade from anywhere and at any time using their electronic devices.
Online foreign exchange trading platforms give access to global markets and an opportunity for clients to educate themselves on the global financial markets.
Non- dealing Online Forex brokers do not offer client advice or trade on behalf of their clients.
The other four CMA-licensed non-dealing online foreign exchange brokers are: EGM Securities Limited (trading as “FXPesa”), SCFM Limited (trading as “Scope Markets”), Pepperstone Markets Kenya Limited and Exinity East Africa Limited.
The markets regulator recently embarked on a crack down on 40 online forex traders operating without a licence in a bid to protect investors from possible fraud on the internet.
The CMA issued cease and desist orders to the firms that hide behind web-based platforms to lure unsuspecting individuals to the online scams.
The regulator also issued a joint notice with the Central Bank of Kenya warning Kenyans from dealing with unlicensed online money traders as digital tools make it difficult to catch the firms most of which operate from foreign countries.
Kenya investors have been sending money to offshore accounts for buying and selling currencies, shares, commodities and metals like gold online, but the firms fail to wire back the proceeds when they want to cash out.
Kenya has had a history of losing money to online forex traders who collect money and disappear without a trace.