Unregistered Forex Brokers and Money Managers Warned By Authority
Capital Markets Authority has ordered all foreign exchange brokers and money managers to cease and desist from trading, conducting sensitizations in Kenya and onboarding Kenyan investors or managing online foreign exchange portfolios.
In line with its investor protection mandate, the authority is, therefore, warning Kenyans against engaging in online foreign exchange trading through platforms of unlicensed entities as they risk losing their investments and may not be protected by the law
This is after the observation that several individuals and entities in the country are carrying on the business of an online foreign exchange broker or money manager without the relevant license by the Authority.
According to Paul Muthaura, CMA Chief Executive, the body has regulatory oversight over all entities offering online foreign exchange brokerage services in Kenya, which includes supervision of such entities.
‘’In accordance with provisions of Section 23(1) of the Capital Markets Act and the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017, the Capital Markets Authority (CMA) has issued only one license to EGM Securities Limited (formerly Execution Point Limited)to operate as a Non – Dealing Online Foreign Exchange Broker’’.
According to the Capital Markets Act, section 23 (1), ‘’ No person shall carry on business as online forex broker or hold himself out as carrying on such a business unless he holds a valid license issued under this Act or under the authority of this Act’’.
Mr Muthaura added that as per the provisions of the Regulation 3 of the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017; ‘’A person shall not carry on or purport to carry on business as a dealing online foreign exchange broker, non-dealing online foreign exchange broker or a money manager unless that person has been granted the relevant license by the Authority; and a person who carries on or purports to carry on business as a dealing online foreign exchange broker, non-dealing online foreign exchange broker or a money manager without the relevant license commits an offence and risks criminal prosecution’’.
The Authority has, therefore, said it will 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.
Members of the public who have been affected or become aware of such illegal online foreign exchange transactions are advised to report to the Authority or to the Capital Markets Fraud Investigation Unit.