NSE brokers to lose permit if staff fail trading examsWednesday November 11 2015
Core staff of stockbrokers with less than 10-year experience have a year to acquire a securities trading certificate from a UK institution or have their employers struck off.
The Capital Markets Authority (CMA) has made successful completion of the Securities Industry Certification Programme (SICP) mandatory before a brokerage licence, renewable yearly, is issued.
The certification is administered by the Chartered Institute of Securities and Investment (CISI) United Kingdom and is meant for staff transacting with clients.
“The transition period for compliance with this requirement is a period of one year from January 4,” said CMA’s acting chief executive Paul Muthaura.
Equity or bond dealers who have undertaken a comparative programme are allowed to apply to CMA for exemption.
“CMA is committed to ensuring that the capacity of market intermediaries is enhanced in line with international best practice in order to improve the levels of service delivery in the market and attract increased investment within the Kenyan capital markets,” said Mr Muthaura.
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Brokers that the Business Daily talked to attributed the requirement to introduction of new products that have exposed lack of understanding of financial matters among some of them.
The regulator recently introduced the first real-estate investment trust (Reit), now being offered by Stanlib Investment. The debut of the Reit has been extended by a week after the issuer sought more time to respond to investors queries underlining its complexity. Sale of the Reit was to close today but it will now end on November 18.
Other products being introduced include derivatives and asset-backed securities, with the Nairobi Securities Exchange (NSE) eyeing introduction of derivatives before year end.
Currently intermediaries are required to give disclosures on their financial and technological capacities, work operation systems and analysis of staff competence when being licensed.
CISI, formed in 1992 by London Stock Exchange practitioners, currently has more than 40,000 members in 110 countries. It offers courses in capital markets operations, wealth management, risk and compliance.
It was not possible to determine the cost of the programme nor confirm its duration but brokers said it takes six months to complete.
“It is a good requirement and the fact that they have chosen those with less than 10 year-experience is good,” said Paul Mwai the chief executive of AIB Capital, who disclosed most of his staff would be exempt due to their experience. “We will pay for them—so long as they pass—and I don’t think it is that onerous,” he added.
CMA has powers under the law to remove anyone from operations if they have not met the required standards. Brokers employed by banks are required to have international certification. The standardised international certification would give the market confidence in the practitioners and allow them easy access to the global capital markets.
Some stockbrokers and their employees have been in the spotlight for mishandling client deals leading to collapse of several brokerages in the past.
Brokers have in the past called for efforts to be put towards recognition of local certification in the international arena.