The Capital Markets Authority (CMA) has moved to enhance the protection offered by the regulator to currency traders/clients.
The capital markets regulator has established a working group comprising the licensed Forex brokerage community and other stakeholders to develop standards to further protect consumers.
CMA is for instance seeking to ensure that licensed forex brokers make appropriate disclosures and that they roll out a comprehensive investor education program.
The review seeks to mitigate the risks and losses associated with investments in Contract for Differences (CFDs) products.
CFDs refer to contracts between buyers and sellers which stipulate that a buyer must pay a seller for the difference between the current value of an asset and its value at contract time with the asset portfolio including currencies.
CMA’s move to enhance the protection of Forex traders comes amidst sustained interest in forex trading among the investing public.
“In an effort to foster and deepen growth in the online forex trading industry, CMA has facilitated setting up of a Technical Working Group comprising of the licensed online foreign trading brokers as well as other stakeholders including peer regulators to assess the state of the market and propose recommendations to mitigate the challenges faced by investors, traders and licensed players,” noted CMA CEO Wycliffe Shamiah.
Currently, online Forex trading is guided by the 2017 Capital Markets (Online Forex Trading) Regulations.
The rules require brokers and money managers to seek information from clients about their circumstances and investment objectives.
Brokers must also give clients any information needed to enable the client to make a balanced and informed investment decision, in a comprehensible form.
The brokers must also avoid conflict of interest with clients and ensure fair treatment of the client through full disclosures in the case conflict is unavoidable.
CMA has licensed nine non-dealing online foreign exchange brokers including FX Pesa, Scope Markets, Pepperstone, Exinity Capital East Africa, HF Markets, Windsor Markets, Exness, Ingot Africa and Admirals Kenya.
Mansa X and Trade Sense Limited are licensed money managers.
