Business Type: A commodities exchange is a licensed platform for spot commodity trading, including clearing, settlement, and transfer services. These exchanges facilitate the trading of agricultural products, metals, energy, and other physical commodities. Regulated under the Capital Markets Act and the Capital Markets (Commodities Markets) Regulations, 2020.
Licensing Requirements: Key requirements include copies of memorandum and articles of association, rules governing operations, details of trading, clearing, and settlement systems, application fees, satisfactory bank references, and a business feasibility plan evaluated by an entity with proven expertise in commodity markets.
Government Fees: Application fees are approximately KES 250,000, with annual renewal fees of around KES 150,000 to KES 200,000, depending on the exchange’s trading volume and operational scale.
Timeline: The approval process typically takes 90 to 120 days, accounting for the technical review of trading systems and feasibility assessments.
Limitations: Licensed commodities exchanges must ensure transparent price discovery mechanisms, maintain adequate warehousing and quality assurance systems, comply with international commodity trading standards, implement risk management frameworks, and provide market surveillance to prevent manipulation.
Penalties: Violations may result in trading suspensions, license revocation, fines up to KES 5 million, public censure, and prosecution for market manipulation or fraud.
Enforcement: The CMA conducts market surveillance, inspects physical infrastructure, monitors trading activities, and collaborates with other regulatory bodies to ensure compliance with commodity trading standards.