The Capital Markets Authority (CMA) is developing a new system for surveillance of the securities market to curb insider trading and breach of regulations.
The government has received funds from the World Bank to set up the system that will monitor live trading, mine trading data, profile listed companies and intermediaries as the regulatory body pushes to increase the number of players and products in the market.
“Part of the proceeds of this credit will be applied to review and design the securities market surveillance system at the CMA to be implemented over a period of 12 months,” said the National Treasury in a statement.
The market regulator has identified several breaches and is in the process of introducing new products such as derivatives and global depository receipts, necessitating an upgrade.
The system upgrade is also necessary in light of market advances such as online trading and new laws such as anti-money laundering which call for tighter vigilance.
Data generated by the surveillance system will also act as evidence in cases arising from a breach of the law.
Capital markets are attractive to persons engaged in money laundering for distancing their illicit proceeds from dirty sources for eventual integration into the general economy.
Four years ago, CMA used Sh48 million to acquire a software, Capizar Surveillance System, to monitor live trading data at the NSE.
The software was bought from Infotech, a Pakistan based company which had installed the same in its home market and Ghana. Last year the regulator penalised seven stockbrokers for manipulating share prices at the exchange, causing ordinary investors heavy losses.