Capital Markets

CMA admits 12th firm into innovation hub

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Capital Markets Authority (CMA) CEO Wycliffe Shamiah. PHOTO | DIANA NGILA | NMG

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Summary

  • The markets regulator set up the incubating platform, which is designed to encourage innovation in the capital markets in May 2019, targeting firms in the fintech sector.
  • A robo-adviser is a digital platform that provides automated, algorithm-driven financial planning and investing services with little to no human interaction.

The Capital Markets Authority (CMA) has admitted investment adviser Waanzilishi Capital Limited to its regulatory sandbox programme, making it the 12th inductee into the innovation hub.

The markets regulator set up the incubating platform, which is designed to encourage innovation in the capital markets in May 2019, targeting firms in the fintech sector.

A regulatory sandbox is a safe space in which innovators can test new products and services in a normal environment without the risk of consequences from regulators like the CMA.

“Waanzilishi Capital Limited proposes to test a robo-advisory solution (named Ndovu) with an element of discretionary portfolio management,” said the CMA in a statement.

“The robo-adviser will provide automated financial planning services by leveraging data from its clientele about their financial situation and future goals through the Ndovu App as a basis to offer investment advice and automatically invest client assets.”

A robo-adviser is a digital platform that provides automated, algorithm-driven financial planning and investing services with little to no human interaction.

Waanzilishi Capital’s adviser is meant to help clients in account setup and services, customer service, portfolio management and investor education.

CMA sandbox rules mean that Waanzilishi will be required to provide periodic reports on the implementation of its test plans, achievement of test objectives, risks and challenges observed during the testing period and a final report before the expiry of its testing period.

The CMA regulations limit the testing period to 12 months unless the product, service or solution has tested positively and has shown extending the testing is necessary to respond to specific risks.

Robo advisers are becoming more popular among financial institutions looking to save costs associated with running expensive call centres and advisory desks.

In 2020, Standard Investment Bank-owned FourFront Management also tested a robo-advisory solution on the sandbox programme, trying out new products for possible rollout in the local capital markets.

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