Kenyan investors can buy precious metals such as gold, silver and copper on the international markets through Standard Investment Bank (SIB) after the Capital Markets Authority (CMA) granted the firm a licence to trade in currencies and commodities.
The CMA in mid-December granted SIB first money manager licence, which allows the firm to invest offshore in forex and commodities on behalf clients. The investment bank says it can trade in commodities for clients who require minimum of Sh250,000 to tap the global commodities and currencies market.
Local investors wishing to participate in the precious metals market have had to either trade in the commodity in its physical form (bullion) or do so through unregulated offshore dealers.
“The licence permits us to trade foreign exchange in most of the major global currencies and contracts for difference of foreign assets such as oil, precious metals and stock indices,” said Nahashon Mungai, head of global markets at SIB.
“Traditionally precious metal trading which is very lucrative was a reserve of a few participants trading in the London bullion market. This market is now available to Kenyans who can invest in the SIB money management platform.”
Mr Mungai was tapped from Bank of Africa to head the division.
Under precision metal trading, investors’ money will go into buying securities that own an underlying commodity such as gold. The investors do not own the commodity directly, but instead hold shares in the security whose value goes up or down in tandem with the value of the underlying asset.
“The investors have the ability to enter or exit in seconds because we are dealing in a global market abundant with liquidity,” said Mr Mungai.
Lack of liquidity had dimmed trading of the gold-backed assets, which was launched in March 2017, at the Nairobi Securities Exchange (NSE).
SIB is racing its revenue streams that include share and bond trading commissions as well as advisory fees.
“Unlike banks that conduct forex trading on their books, we offer forex trading on behalf of clients and SIB is the first to be licensed in Kenya under money manager category,” James Wangunyu, executive chairman of SIB said earlier.
In October, the regulator had warned Kenyans against online foreign exchange trading through unlicensed entities, saying they risked losing investments.