Forex trading in Kenya: There is a lot of hype about online forex trading with promises of making profit or money without even having to be an expert in the sector. The benefits touted include flexibility and the chance to enjoy high returns.
I am not aware if there are companies in Kenya that provide online forex trading, however I am aware that this year, the Capital Markets Authority (CMA) passed the CMA Foreign Exchange Trading Regulations, 2017.
The first thing to know as an investor is that the entity that seeks to provide services must be licensed by CMA. It is, in fact, an offence to provide online forex trading services without a licence.
Here is what to know if you seek to set up a business in online forex trading services. First, the enterprise has to be a Kenyan company with a paid up capital of between Sh30-50 million depending on class.
The capital input is a bit high and probably out of the reach of small players, but that is the regulation. Second, you must show capability in terms of infrastructure that is, office space, human resource, including, perhaps, ICT capability.
Before you can get a licence, you must make an application containing details such as a letter from a recognised online trading platform, business plans, client policies, know-your-client manuals to guard against money laundering, and dispute resolution mechanisms between your firm and its clients.
Before you can get started, you will need to have a CEO who must meet minimum qualifications and expertise as set out in the regulations.
Finally, even as you begin the trade, it is important to note that there are a number of continuing obligations owed to the regulator, including detailed information on customer complaints and reports on daily reconciliations.
As with other financial investment products, we wait to see the performance of this in the market.
This feature is written by CATHY MPUTHIA.