The Capital Markets Authority of Kenya (CMA) has now announced that it is accepting applications for firms which would like to take part in the regulatory sandbox. This is after the Board of the CMA approved the Regulatory Sandbox Policy Guidance Note. The firms which will be accepted will participate in the sandbox for twelve (12) months within which they can test their innovative products and services for the fintech market.
The finalized Regulatory Sandbox Policy Guidance Note and the application form can be found here.
Aside from the application form, the applicants will be required to pay a non-refundable fee of Kshs. 10,000 and avail the following documents:
- Certified copies of all incorporation documents;
- Certified list of directors and shareholders;
- CVs for all founders and/or key managers;
- Testing Plan; and
- Safeguards Plan (risk management plan).
The participants in the sandbox will be expected to meet certain minimum regulatory requirements that it will prescribe. The CMA will provide guidance on a situation where it considers that a proposed innovation is already covered under existing legislation to avoid situations where players in the sandbox would have an unfair advantage over participants who are in the free market.
The CMA has clarified that the sandbox is not for testing ideas which are still in the conceptual stage; rather for innovations which have been developed to the level of operational testing. The CMA is however willing to work with existing incubators to identify innovators who have capital markets related ideas who can be hosted in the sandbox once they reach maturity.
The CMA expects to use the experiences in the sandbox to better understand emerging technologies in order to legislate effectively for the capital markets sector. After the testing period in the sandbox, the participants will either be licensed to operate under existing laws and regulations, be licensed to operate under the terms of a letter of no objection or be denied permission to operate in Kenya.
In a related move, the Board of the CMA has established a Financial Markets Law Review Panel consisting of legal and financial markets experts from around the world. The Panel will advise the CMA on legal and regulatory reforms which can plug the gaps and solve the challenges in financial markets law in Kenya. The establishment of this panel was one of the CMA’s goals under its Capital Markets Master Plan 2014-2023 under the pillar of restructuring the legal framework for regulation.
Please contact us at info@cfllegal.com if you require any more information.
