Business Type: Commodities brokers are companies cleared by commodity exchanges and licensed by the CMA to carry on the business of purchase or sale of commodities contracts as agents for investors or on their own account.
Licensing Requirements: Must be a company limited by shares, have a chief executive officer who is fit and proper with at least five years of experience in buying, selling, or dealing in commodities, spot commodity contracts, derivatives contracts, or other securities, possess necessary infrastructure including office space, equipment, and trained staff, have directors and key personnel who meet fit-and-proper criteria under section 24A of the Act, and maintain minimum net capital and net worth as determined by the commodity exchange and approved by the Authority.
Government Fees: Application fees are approximately KES 80,000 to KES 100,000, with annual renewal fees of around KES 50,000 to KES 70,000.
Timeline: The approval process typically takes 60 to 75 days, subject to verification of experience, infrastructure, and financial capacity.
Limitations: Commodities brokers must comply with exchange rules, maintain adequate capital, implement risk management systems, segregate client funds, and provide clear disclosure of commodities trading risks to clients.
Penalties: Violations may result in suspension from trading, license revocation, financial penalties, investor compensation claims, and prosecution for fraud or misconduct.
Enforcement: The CMA collaborates with commodity exchanges to monitor trading activities, conduct inspections, review client fund segregation, and ensure compliance with commodities market rules.