The Sandbox policy is available to firms incorporated in Kenya, the other East African States and countries whose securities market regulators have entered into Memorandum of Understanding with CMA.
Kenya has finally unveiled its much awaited Sandbox Policy Guidelines Note which will help will facilitate the admission of fintech firms to normal capital markets. The sandbox platform which will regulate fintechs including cryptocurrency start-ups.
The Capital Markets Authority (CMA) has announced the publication of a draft notes as outlined in the CMA Strategic Plan 2018-2023.
CMA has been engaging Nailab, MyCenti, Point50 Capital, Partnership for Urban Innovation, Cambridge Center of Alternative Finance, Bitpesa, FMO (Netherlands Development Finance Company), Lendahand, Renovation Capital, and CENFRI (Center for Financial Regulation and Inclusion).
A Regulatory Sandbox is a tailored regulatory environment that allows companies to deploy innovative products, solutions and services to conduct live tests for their innovations within a limited scale. The innovations to be tested should have the potential to deepen and develop Kenya’s capital markets.
Mauritius, which was ranked the second most innovative country in Sub-Saharan Africa, already has a regulatory sandbox which has played a huge role in attracting investors in the fintech and emerging technologies sectors.
“The Regulatory Sandbox is intended to accelerate the Authority’s understanding of emerging technologies and support evidence-based approaches to the development of deepening and development; and investor protection in line with the 10-year Capital Markets Master Plan, “said CMA Chief Executive Paul Muthaura.
It is available to firms incorporated in Kenya, other East African States and countries whose securities market regulators have entered into Memorandum of Understanding with CMA.
The initial testing period for financial technology firms admitted to the Regulatory Sandbox shall be determined through consultations between the Authority and applicants, however, the testing period shall be twelve months subject to an extension by CMA. Applicants will be required to pay to the Authority Ksh10,000 upon submission of application forms.
The publication of the Regulatory Sandbox PGN is a critical milestone towards fostering and promoting the responsible growth of fintech by providing a supportive regulatory environment where promising innovations can operate, subject to restrictions on client access and investment size.
The Regulatory Sandbox Provides reduced time-to-market at lower costs, better access to finance, more innovative products and the consequences of client access.
Mr. Muthaura added, ‘supporting Fintech through the Regulatory Sandbox will call for stronger coordination with other financial sector regulators to ensure that there are no gaps or overlaps and that scalable solutions are touching on multiple sectors.
Other capital markets regulators that have established Regulatory Sandbox frameworks include United Kingdom Financial Conduct Authority, Australian Securities and Investments Commission, Monetary Authority of Singapore and Financial Services Regulatory Authority (FSRA) or Abu Dhabi Global Market.
The Policy Guidance Note is open for scrutiny by stakeholders and the general public, for 30 days to 20 January, 2019 in line with the Constitution of Kenya which prioritises effective public participation in the policy making process.