CMA cautions the public on unlicensed online forex brokers
Capital Markets Authority has cautioned the public against working with unlicensed online forex brokers adding that those found dealing with them will not be protected from the law in case of any breach of contract.
CMA raised concern over the number of unlicensed unscrupulous forex brokers swindling Kenyans their hard earned cash.
“A regulatory license is a clear proof of a broker commitment to adherence to and compliance with regulatory requirements specified. This is very fundamental in order to promote efficient, fair and orderly operation of the financial markets.” Paul Muthaura CEO Capital Markets Authority.
The new regulations will require the licensing of those entities dealing with online foreign exchange brokers, non-dealing online foreign exchange brokers and money managers. Online Forex trading runs like equity markets short sellers. It involves placing a bet on a particular currency and trading it through the internet, with the basic aim of buying low and selling high.
“An applicant seeking a license as an online forex broker shall be a company limited by shares, have a minimum capital of Ksh50 million, make an undertaking to maintain the minimum capital at all times plus five per cent of liabilities owed to forex customers in excess of Sh50 million and ensure that Sh40 million or 80 per cent of its capital, whichever is higher, is in the form of cash and cash equivalents in financial instruments at all times.”