Investment banks prop up Capital Markets Authority
by Lewis Njoka
Investment bankers have defended the Capital Markets Authority (CMA) saying it has been effective and efficient in over-sighting the regulated section of the troubled agency.
This comes barely a week after Garissa Town Member of Parliament, Aden Duale, accused CMA of failing to oversight the capital market resulting in huge losses for investors, as a time when the sector is also running a dry spell with initial public offerings (IPOs) lacking.
In a statement, Kenya Association of Stockbrokers and Investment Bankers (Kasib) says it was aware there existed schemes in the market that are not regulated by CMA but commended the regulator for what it termed as efficient work.
“KASIB remains in support of a fair and orderly market and commends the CMA on its continued diligent balance of regulating the market.
Thus far, KASIB confirms that the regulator has been effective and efficient in over-sighting the regulated industry and any unregulated entity must be dealt with to protect the image of the industry, and to preserve investor confidence,” reads the statement in part.
Kasib called on CMA and the government to crackdown on unregulated schemes and advised investors to only invest in products that are regulated to ensure that their investments were protected.
However, Kasib’s assessment of CMA’s performance differs sharply with that of Duale who termed the regulator as negligent. Speaking in Parliament Tuesday last week, Duale blamed CMA for losses investors have suffered at the capital market over the years through regulated transactions including Imperial Bank bond, Chase Bank bond, Nakumatt commercial paper and more lately, the Cytonn high yield bond.
He demanded to know the effectiveness and efficiency of the CMA in regulating the capital markets, the total number of firms’ it has penalized in the last five years and the remedial action the authority has taken for investors who lost their funds.
“The estimated total losses of innocent Kenyan investments due to the negligence of CMA in terms of regulation is approximately Sh36.8 billion.
To put this into perspective, the total estimated loss of Sh36.8 billion in the capital markets industry in the incidences highlighted herein is an equivalent of one-half of the total Sh72.59 billion customers deposits held at Family Bank Limited as at 31st March 2021,” Duale said.
“It is on account of these grave concerns relating to the efficiency by CMA in regulating the capital market industry and the continued loss of investments of innocent Kenyans that I seek for a statement from the chairperson of the Departmental Committee on Finance and National Planning,” he added.
Duale’s sentiments were sparked by recent events where investors purported they risked losing billions held in an unregulated product offered by Cytonn.
The cautioned investors against investing through unlicensed and unapproved entities.
On its part, CMA also distanced itself from the woes facing Cytonn saying it had nothing to do with the unregulated product.