The Capital Markets Authority (CMA) has allowed trading at the Nairobi Coffee Exchange (NCE) using the old payment rules that were in place under general regulations, which ceased to exist at the end of June.
The move gives stakeholders more time to comply with new guidelines that were to be implemented last week.
The Capital Markets (Coffee Exchange) Regulations 2020, which were gazetted in April and were to be effected on July 1, give the CMA the mandate to license the coffee exchange and brokers.
To facilitate transitional arrangements in the coffee sector, the CMA yesterday issued guidance to support direct stakeholders as the auction opens today after a month’s break.
The markets regulator said it has allowed the older rules to be used pending the creation of the direct settlement system (DSS), with marketers required to remit the funds to the cooperative societies as they have been doing under the General Coffee Regulations.
“CMA directs that the existing payment mechanisms be utilised in the interim period as the DSS is being put in place. Details of direct coffee sales will be reported to the Nairobi Coffee Exchange,” said acting CMA chief executive Wycliffe Shamiah.
“The Nairobi Coffee Exchange is granted permission to operate as it works towards full compliance with the regulations.”
He added that those intending to offer coffee brokerage services are also allowed to continue performing the role once they apply, as they work towards full compliance of the CMA regulations.
There was panic among the stakeholders after it emerged that the new regulations would not be effected as planned, creating uncertainty on how farmers earnings would be protected.
The concerns emerged from the fact that farmers will no longer be covered by the guarantee money that the marketing agencies had paid to Agriculture and Food Authority, which was applicable under the general coffee regulations that were to cease operating in June.
Each marketing agency normally pays Sh1 million as a guarantee to the regulator to protect farmers’ produce in the event they fail to remit the growers’ earnings.