According to local reports, Capital Markets Authority (CMA) has issued new guidelines that instruct online foreign exchange brokers to enhance their disclosure mechanisms.
Disclosure mechanisms refers to the processes and practices used by companies and financial institutions to provide relevant and transparent information to their investors, clients, or the public. Disclosure mechanisms typically include:
- Financial statements
- Annual reports
- Quarterly reports
- Regulatory filings
- Earnings calls
- Corporate websites
- Press releases
- Proxy statements
- Risk disclosures
- Environmental, Social, and Governance (ESG) reports
- Brokerage statements
This recent move is meant to foster transparency and safeguard investor interests.
“To mitigate the risks and losses associated with participating in Contract for Differences (CFDs), the CMA is working with the licensed forex brokers to ensure there are appropriate disclosures and rollout of a comprehensive investor education programme.”
The authority is said to be collaborating with licensed brokerage firms and other stakeholders to establish standards that will protect consumers by ensuring the integrity of Contracts for Difference (CFD) products and deliver satisfactory outcomes for all parties involved.
A Contract for Difference (CFD) is an agreement between a buyer and a seller in which the buyer agrees to pay the seller the difference between the current value of an asset and its value at the time the contract is entered into.
CFDs provide traders and investors with a chance to make gains from price fluctuations without having to possess the actual assets. The CFD’s worth is solely based on the difference in price between when the trade begins and when it concludes, without taking into account the fundamental value of the asset.
“In an effort to foster and deepen growth in the online forex trading industry, CMA has facilitated setting up of a Technical Working Group comprising of the licensed online foreign trading brokers as well as other stakeholders, including peer regulators, to assess the state of the market and propose recommendations to mitigate the challenges faced by investors, traders and licensed players,” said CMA Chief Executive Officer, Mr. Wyckliffe Shamiah.
CMA has so far licensed nine non-dealing online foreign exchange brokers and two money managers:
- EGM Securities Limited (trading as FX Pesa)
- SCFM Limited (trading as Scope Markets)
- Pepperstone Markets Kenya Limited
- Exinity Capital East Africa Limited
- HFM Investments Limited (trading as HF Markets)
- Windsor Markets Kenya Limited
- Tadenex Limited (Trading as Exness)
- Ingot Africa Limited
- Admirals KE Limited
The money managers are:
- Standard Investment Bank (trading as Mansa X)
- Trade Sense Limited
Follow us on Twitter for latest posts and updates
__________________________________________
__________________________________________
