Business Type: Securities exchanges are regulated markets or platforms where securities are offered for sale, purchase, or exchange, including any clearing, settlement, or transfer services. The primary example is the Nairobi Securities Exchange (NSE), which facilitates the trading of equities, bonds, and other financial instruments.
Licensing Requirements: Applicants must be incorporated companies whose memorandum and articles of association restrict their business to operating as securities exchanges. Key requirements include rules, memorandum and articles of association, details of the proposed trading system, prescribed licensing fee, and any additional documents required by the Authority.
Government Fees: The licensing fee varies by scale and operational scope. The NSE pays approximately KES 500,000 annually for license renewal. Initial application fees are determined on a case-by-case basis.
Timeline: The approval process typically takes approximately 90 days from the date of submission of a complete application, subject to regulatory review and compliance verification.
Limitations: Licensed securities exchanges must maintain robust trading systems that ensure market integrity, comply with listing rules and regulations, implement adequate risk management frameworks, ensure transparency in trading activities, maintain proper clearing and settlement systems, and report regularly to the CMA.
Penalties: Non-compliance with regulations may result in suspension of trading activities, license revocation for serious breaches, financial penalties up to KES 5 million, public censure and reputational damage, and court action and prosecution for fraudulent activities.
Enforcement: The CMA exercises oversight through regular audits and inspections of exchange operations, monitoring of trading activities, authority to halt trading when market integrity is threatened, public notices and disclosures of violations, and mandatory reporting requirements for exchanges.