Business Type: Authorized securities dealers are banks licensed under the Banking Act or financial institutions approved by the CMA to deal in fixed-income securities listed on the Fixed Income Securities Market Segment (FISMS) at securities exchanges. They act as market makers and dealers to enhance trading and liquidity in the fixed-income securities market and minimize counterparty risk.
Licensing Requirements: Must be incorporated as a company, provide a detailed business plan, commit to investing a minimum of KES 200 million in FISMS with turnover every 6 months (either on sale or purchase), and trade and deal only in minimum lots of KES 5 million (trades below this amount must be transacted through stockbrokers).
Government Fees: Application fees are approximately KES 100,000, with annual renewal fees of around KES 60,000 to KES 80,000.
Timeline: The approval process typically takes 60 days for established banks and financial institutions, as they already meet many regulatory requirements.
Limitations: Authorized securities dealers are restricted to approved fixed-income securities, must trade in minimum lots of KES 5 million, are required to act as market makers, and must maintain the minimum investment commitment of KES 200 million.
Penalties: Violations may result in fines, license withdrawal, suspension from trading, public censure, and prosecution for market manipulation or non-compliance.
Enforcement: The CMA monitors off-exchange transactions, reviews trading volumes and liquidity provision, ensures compliance with minimum lot sizes, and verifies the maintenance of minimum investment commitments.