The Capital Markets Authority (CMA) has warned Kenyans against engaging in online foreign exchange trading through unlicensed entities as they risk losing their investments, and may not be protected by the law.
CMA has regulatory oversight over all entities offering online foreign exchange brokerage services in Kenya, which includes not only investor protection but also supervision of such entities.
Although the Authority’s chief executive Paul Muthaura did not name the culpable entities, he noted the Authority has licensed only EGM Securities Limited (formerly Execution Point Limited) to operate as a non-dealing online foreign exchange broker. Regulation 3 of the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017, criminalises dealing in online foreign exchange brokerage and non-dealing online foreign exchange brokerage.
The potential of online forex markets – where currencies are traded in pairs – is huge. It is a good investment vehicle for those averse to trading risk. While the foreign exchange market is all about speed and the movement of currencies, traders must exercise caution because often, losses can exceed deposits.
The potential of online forex markets – where currencies are traded in pairs – is huge. It is a good investment vehicle for those averse to trading risk
At a time when investors are only guaranteed legitimate online trading, the Authority has promised to take appropriate enforcement action against any persons or entities illegally conducting online foreign exchange trade or collecting client funds in contravention of regulatory provisions.
Investment advisor Aly-Khan Satchu told journalists during a recent press conference that with the number of people interested in investing on online foreign market rising, licensing and regulation ought to be a priority.
“It is a vote of confidence for Kenya’s financial and capital markets and regulatory environment. But there’s a lot to it, like training people, and… I think the opportunity is very enormous. The architecture is being built. We have big corporates and also people in the streets with big appetite for online forex trading. Already, there are people who are accessing this market. These traders invest as low as Sh50,000.”
When well executed, the foreign exchange market can be a great investment vehicle for those with a nose for speculation. (