The Capital Markets Authority (CMA) has licensed the Kenyan Alliance Asset Management Limited as a fund manager, increasing the total number of licensed fund managers in Kenya to 42.
With its entry into the market, Kenyan Alliance Asset Management will look to provide wealth and portfolio management services tailored to both individual and corporate clients, in full compliance with the Capital Markets Regulations.
The CMA has also allowed Yeshara Tokens Limited to test a new system for trading real estate using blockchain technology.
Yeshara Tokens has now been granted a 12-month testing period under the sandbox framework, during which it must meet specific requirements outlined by the CMA.
The company will need to follow a proposed testing and customer acquisition plan while developing an exit strategy to facilitate the product’s commercial rollout upon completion of the testing phase.
“Through its blockchain-powered Yeshara Platform, the company will test the trading of tokenized securities, focusing initially on real estate. This innovation is set to unlock liquidity and broaden access to financial markets,” reads a statement from the CMA.
The regulatory sandbox provides a secure and controlled environment for testing innovative financial solutions, aligning with CMA’s mission to foster market integrity, investor confidence, and market development.
“The tokenization of real estate holds significant potential to expand access to international financial markets for both local and global investors,” CMA Chief Executive Officer Wycliffe Shamiah noted.
CMA Kenya has reported that blockchain applications have presented unique challenges during the sandbox testing process.
Despite these drawbacks, the regulator continues to see growing interest in blockchain technology, particularly in sectors such as real estate and financial services.
Since the sandbox’s inception in March 2019, the authority disclosed that 9 out of 24 applications were focused on blockchain solutions and real estate tokenization.
A fund manager is a person or a company which manages and executes investment strategies for funds, such as mutual funds, pension funds, trust funds, and hedge funds.
In Kenya, the Fund Managers Association is the umbrella body for fund managers and was established in 2008.
It aims to promote responsible and sustainable asset management and membership in the association is open to Capital Markets Authority licensed organizations who manage funds on behalf of their clientele.
In other News, The investigation into suspected irregular trading of National Social Security Fund (NSSF) government bonds has stalled, with the Central Bank of Kenya (CBK) still awaiting updates from the Capital Markets Authority (CMA) following concerns raised last August about suspicious bond trades conducted between May and July.
CBK had requested an investigation into trades involving Humphrey Wachira Gichuru and Pargamon Investment Bank
Where a fund manager allegedly bought bonds for NSSF at above-market prices and in some cases sold them at lower rates before repurchasing at higher prices days later.
The CMA, which admits the investigation has become a "hot potato" involving powerful people, acknowledges that their efforts were hampered by the premature leaking of the August 19 letter, potentially allowing suspects to destroy communication evidence.
While CMA CEO Wycliffe Shamiah maintains investigations are ongoing, the Finance and National Planning Committee of the National Assembly's early September summons of CBK governor Kamau Thugge and Shamiah failed to materialize, and the committee has since gone quiet on the inquiry.
The case highlights challenges in prosecuting potential financial crimes, particularly when compared to more successful uses of technology and wiretaps in similar cases in the US and Europe.
The NSSF bond trading scandal echoes similar historical cases of pension fund mismanagement in Kenya, most notably the 2008 case where the fund lost Kshs 1.6 billion through irregular share trading by Discount Securities Limited.
The investigation's stagnation raises critical questions about the effectiveness of Kenya's multi-agency approach to financial crime, especially given that the NSSF manages over Kshs 300 billion in workers' retirement savings.
As institutional investors and market players watch this case closely, two pressing questions emerge:
Will this scandal prompt the long-overdue reform of Kenya's financial market surveillance systems, and could this case finally catalyze the implementation of real-time trading monitoring systems similar to those used in developed markets?