Business Type: This sector includes Dealing Online Foreign Exchange Brokers (entities that engage in online foreign exchange trading as principals and market makers), Non-Dealing Online Foreign Exchange Brokers (entities that act as links between the forex market and clients in return for commissions or mark-ups in spreads without engaging in market-making activities), and Money Managers (entities that manage online forex portfolios of individuals or institutions in return for fees based on a percentage of assets under management).
Licensing Requirements: For dealing or non-dealing online forex brokers, applicants must provide a letter from a recognized online forex trading platform stating that the applicant meets all relevant requirements and will be admitted if licensed by the CMA. For money managers, an agreement with an online forex broker licensed by the Authority is required. All applicants must provide client on-boarding policies, business plans, individual risk assessments, anti-money laundering and know-your-client checks, product sensitization frameworks including client appropriateness assessments, internal dispute resolution mechanisms for customer complaints, all relevant service level agreements with other online forex market service providers, and prescribed fees.
Government Fees: Application fees are approximately KES 300,000 for dealing brokers, KES 200,000 for non-dealing brokers, and KES 150,000 for money managers. Annual renewal fees are around KES 200,000, KES 120,000, and KES 100,000 respectively.
Timeline: The approval process typically takes 90 days, accounting for the review of platform arrangements, risk management frameworks, and client protection measures.
Limitations: Online forex brokers must segregate client funds from proprietary accounts, disclose risks prominently to clients, implement robust anti-money laundering and know-your-client procedures, provide client appropriateness assessments, maintain internal dispute resolution mechanisms, and comply with platform requirements.
Penalties: Violations may result in license suspension, investor protection actions, fines, public censure, and prosecution for fraud or misappropriation of client funds.
Enforcement: The CMA conducts platform audits, verifies client fund segregation, monitors compliance with risk disclosure requirements, reviews complaint resolution processes, and ensures adherence to AML/KYC standards.