The Capital Markets Authority says it will now ride on technology to identify and catch persons involved in illegal trading of stocks and bonds.
This even as insider trading by company employees continues to drag the reputation of Kenya’s securities market in the mud.
CMA director on Regulatory Policy and Strategy Luke Ombara told the Star the regulator plans to test Regulatory Technology (Regtech) solutions in the Sandbox.
A sandbox is a space that allows financial based technology firms (Fintechs) to test the viability of their innovations without incurring all regulatory consequences. It is expected to go live in April.
Ombara said besides Regtech, Supervision technology solutions (Suptech) will be tested to detect any kind of front running among marketers. Suptech is mainly used by the regulator to detect illegal activities in the stock market.
Currently, CMA is carrying out investigations into suspected insider trading in KenolKobil that occurred ahead of a planned buyout of the company by French firm Rubis Énergie SAS’.
On Tuesday, the authority penalised David Maena, an ex-CBA Bank market dealer Sh166.9 million for irregular trading of government securities in 2016 and 2017.
While he dashed doubts on whether Suptech can be tested in the Sandbox, Ombara said CMA has to procure it for use locally. The sandbox is meant to accommodate products such as peer to peer financing, the blockchain, distributed ledger technology, artificial trading, big-data, online broking among others. However, according to authority’s CEO Paul Muthaura, the platform will not be open for innovations that use cryptocurrencies as a form of transaction.
“The Authority has a regulatory mandate that does not extend to payments for currency related activities and therefore we are not in a legal position to consider anything related to a cryptocurrency,” he said,
In December last year, CMA announced the publication of a draft regulatory Sandbox Policy Guidance Note to facilitate the admission of fintech firms in the sandbox.