CMA directors exit casts shadow on grain auction plan
Mr Paul Muthaura. The Capital Markets Authority has not appointed a chief executive but Mr Muthaura is holding the fort in an acting role. Photo/FILE
What you need to know:
Former CMA chairman Kung’u Gatabaki said that he and other independent directors left the regulator’s board last month.
Move comes as four financial regulators prepare to merge
The fate of the proposed commodities exchange, county bonds and other major projects are in limbo following the exit of independent directors at the Capital Markets Authority (CMA) after the expiry of their contracts.
Former CMA chairman Kung’u Gatabaki said that he and other independent directors left the regulator’s board last month.
“I left on May 31 after my contract expired. It has not been renewed. Most of the independent directors have gone,” said Mr Gatabaki.
CMA’s 2013 annual report states that the board had seven independent board members, while three others represent the Treasury, Attorney-General’s office and the Central Bank of Kenya.
The exit of board members was inevitable due to the pending harmonisation of regulators in the financial industry, but Mr Gatabaki said that there was an arrangement with the Treasury, the parent ministry, to allow for a seamless handover.
“We had an assurance from the Treasury that there would be a smooth transition,” said Mr Gatabaki.
The Report of the Presidential Taskforce on Parastatal Reforms recommended the consolidation of the CMA, the Insurance Regulatory Authority (IRA), Retirement Benefits Authority (RBA) and Sacco Societies Regulatory Authority (Sasra).
The taskforce recommended that the four regulators be amalgamated to form the Financial Services Authority (FSA) in a step aimed at increasing efficiency.
The report said that it would be easier to have one regulator to report to due to increasing interaction across industries such as banking, insurance and telecommunications.
“Consolidating domestic financial sector regulators is a natural evolution of Kenya’s financial services industry from a traditionally compartmentalised and fragmented industry to a highly sophisticated industry that can effectively respond to regional financial and monetary integration, develop the Nairobi International Financial Centre and propel Kenya to be the regional financial services hub,” said the report.
Mr Gatabaki said he was not sure whether projects that are in the pipeline will be delivered in time in the absence of a board. Treasury said that the proposed laws that will give birth to the FSA will soon be tabled in Parliament for debate.
“I will shortly be tabling the new bills for the regulatory and supervisory aspects of the financial services sub-sector and the administrative bill for the establishment of the Financial Services Authority for your consideration and enactment,” said Treasury Secretary Henry Rotich when he read this year’s budget.
Market players who declined to be quoted said that their biggest fear is that major projects, especially the futures exchange, will be delayed in the absence of a board and chief executive.
The CMA has not appointed a chief executive but Mr Paul Muthaura is holding the fort in an acting role. The futures exchange is meant to create a market that will allow trading in securities whose underlying assets are grains, currencies and minerals, among other goods.
Farmers in particular are expected to benefit since the market is expected to stabilise the prices of farm produce.
Brokers are also anticipating that the futures exchange will create new revenue streams for the intermediaries and they have begun positioning themselves through simulating trading and partnering with other exchanges.
Other pending projects include county bonds, laws on public private partnerships and Shariah-compliant bonds, or Sukuk bonds.
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