The Capital Markets Authority (CMA) is the regulatory body for capital markets in Kenya. Established in 1989, the CMA plays a crucial role in developing, regulating and facilitating an efficient capital market in Kenya. This article provides an overview of the CMA, its functions, role, operations and impact on Kenya’s capital markets.


The Capital Markets Authority (CMA) is a statutory agency tasked with supervising, licensing and monitoring the activities of market intermediaries, including the stock exchange, brokers, dealers, and investment banks. The CMA was established under the Capital Markets Act Cap 485A which provides the regulatory framework for Kenya’s capital markets.

The key functions of the CMA include regulating the issuance of securities such as equities and bonds, approving public offers of securities, licensing market players, promoting market development, and protecting investor interests. As the regulator of Kenya’s capital markets, the CMA plays a pivotal role in maintaining efficient, fair, orderly, and transparent capital markets.

History and Establishment of the CMA

Prior to 1989, the responsibility of regulating Kenya’s capital markets was vested in the Central Bank of Kenya (CBK). However, with the rapid developments in the capital markets, it became apparent that a dedicated regulator was required. This led to the enactment of the Capital Markets Act in 1989 which established the Capital Markets Authority.

The CMA officially began its operations in 1990 with a mandate to promote the development of orderly, fair and efficient capital markets in Kenya. Some of the key events in the history of CMA include:

  • 1989: Enactment of the Capital Markets Act leading to establishment of the CMA
  • 1994: Nairobi Stock Exchange is registered as a private company and develops into a modern securities exchange
  • 1995: Introduction of the Central Depositories Act which established the Central Depository and Settlement Corporation (CDSC)
  • 2000: Demutualization of the Nairobi Stock Exchange making it a publicly listed company
  • 2011: Merger between the CMA and the Retirement Benefits Authority (RBA)

Over the years, the CMA has played a pivotal role in the transformation of Kenya’s capital markets into a modern, globally competitive marketplace.

Organizational Structure of the CMA

The Capital Markets Authority has a board that comprises of both executive and non-executive members drawn from the public and private sectors. The board is responsible for providing strategic direction and overseeing the management of the authority.

The Board

The CMA Board consists of nine members including the Chairman, the Chief Executive and seven non-executive members. The non-executive members represent various stakeholders such as the Central Bank, Ministry of Finance, Law Society of Kenya and the Institute of Certified Public Accountants of Kenya.

The board is responsible for approving policies, granting licenses, setting standards and issuing rules and guidelines for efficient regulation of the capital markets.

The Chief Executive

The Chief Executive Officer is responsible for the day-to-day management of the Authority’s affairs. The CEO is also the link between the management and the Board.

The Management

Assisting the Chief Executive Officer is the senior management team comprising of heads of departments and divisions including:

  • Corporate Affairs
  • Legal Affairs
  • Regulatory Policy and Strategy
  • Compliance and Enforcement
  • Licensing Approvals and Authorisation
  • Finance and Administration

The Management team is responsible for implementing the strategic objectives of the authority and ensuring adherence to set standards and regulations.

Functions and Role of the Capital Markets Authority

As the regulator of Kenya’s capital markets, the CMA plays a pivotal role in developing, regulating and facilitating an efficient capital market. The key functions and roles of the CMA include:

1. Regulating the Securities Exchange

The CMA oversees the operations of the Nairobi Securities Exchange which is a licensed securities exchange in Kenya. The CMA regulates the stock exchange to ensure fair and orderly trading in a transparent environment. This enhances investor confidence in the market.

2. Supervising Market Intermediaries

The CMA licenses and supervises all capital market intermediaries including stockbrokers, dealers, investment banks, fund managers, investment advisors and credit rating agencies. The CMA monitors their conduct to protect investors from malpractices.

3. Approving Public Offers of Securities

All public offers of securities whether initial public offers or issues of corporate bonds must be approved by the CMA before issuance. This ensures compliance with set standards which protects investors.

4. Promoting Market Development

The CMA undertakes initiatives to enhance capacity of market players, introduce new products and implement reforms to align the capital markets to international standards. This promotes the growth and competitiveness of the Kenyan capital markets.

5. Protecting Investor Interests

The Authority has established an investor compensation fund to compensate investors who suffer losses due to failure of a licensed broker or dealer. Further, the CMA has a tribunal where investors can seek redress in case of disputes.

6. Enforcing Regulations

To maintain market integrity, the CMA investigates cases of insider trading and other market malpractices and applies sanctions where necessary. Flouting of regulations leads to fines, suspension or revocation of licenses.

7. Advising the Government

The CMA advises the government on matters relating to the capital markets and provides feedback on how policy decisions may impact the capital markets and the economy.

8. Investor Education

The CMA undertakes initiatives to educate the public on investments in the capital markets. This enhances financial literacy and promotes informed investment decision making.

Operations of the Capital Markets Authority

To deliver on its broad mandate, the CMA undertakes various initiatives and activities aimed at developing and regulating the capital markets.

Licensing Market Participants

The CMA licenses and regulates all capital market players including stockbrokers, investment banks, fund managers, investment advisors, securities dealers, credit rating agencies and the Nairobi Securities Exchange. Licensing enables the CMA to monitor the activities of these players to ensure compliance.

Overseeing Public Offers

All public offers whether IPOs or issues of corporate bonds require regulatory approval from the CMA. This is to ensure the necessary disclosures are made and legal requirements met to protect investor interests.

Supervisory Surveillance

The CMA continuously monitors the activities of licensed players through surveillance systems, inspections and investigations to identify possible cases of market malpractices.

Enforcement Actions

The CMA has powers to undertake enforcement actions on entities that breach capital markets regulations. This includes imposing fines and penalties, suspending or even revoking licenses in severe cases of violation.

Product Approvals

The introduction of new capital market products like derivatives requires approval from the CMA. The aim is to ensure transparency, integrity and minimal risks to investors.

Monitoring Compliance

The Compliance department regularly assesses regulatory compliance by licensees through inspections, data analysis and engagement with industry players. This enhances compliance.

Investor Education

The CMA undertakes investor education through media engagements, publications, workshops and outreach programmes. The target groups are existing and potential investors, youth, women and SMEs.

Stakeholder Engagements

The Authority regularly engages with stakeholders through forums like the Kenya Capital Markets Soundness Report. Engagements with industry players enable the Authority to get feedback for improvement.

Market Infrastructure

The CMA facilitates the development of market infrastructure such as the automation of the Nairobi Securities Exchange and the establishment of a Central Depository System (CDSC) and Central Counterparty (KCCP).

International Cooperation

The CMA participates in initiatives of regional and global bodies like IOSCO and EASRC to benchmark local regulation and implement international best practices.

Impact of the Capital Markets Authority on Kenya’s Capital Markets

Since its establishment, the CMA has spearheaded numerous positive changes that have served to strengthen and develop Kenya’s capital markets.

1. Enhanced Investor Confidence

By regulating market players and ensuring transparency, the CMA has enhanced investor confidence in Kenya’s capital markets. This has seen an upward trend in domestic and foreign investor participation.

2. Market Infrastructure Reforms

The CMA has overseen key infrastructure reforms including automation of the NSE, demutualization of the NSE, establishment of the CDSC and introduction of a Central Counterparty to enhance the competitiveness of Kenya’s capital markets.

3. Increased Product Innovations

New capital market products like derivatives, ETFs and REITs have been introduced under the guidance of the CMA. This has provided investors with a diversified array of investment options.

4. Boosting Corporate Governance

The corporate governance guidelines and listing rules enforced by the CMA have strengthened governance practices by public listed companies enhancing investor confidence.

5. Greater Supervisory Surveillance

There is now increased surveillance of licensed entities enabled by reporting rules and insolvency mechanisms put in place by the CMA to protect investors.

6. Enhanced Capital Raising

The CMA has facilitated increased capital raising through IPOs, rights issues, corporate bonds and introduction of alternative investment markets like EMPEA.

7. International Standards

Reforms driven by the CMA have increasingly aligned Kenya’s capital markets with international standards making it competitive globally.

8. Increased Financial Literacy

The CMA’s advocacy and investor education initiatives have increased knowledge among Kenyans on investing in the capital markets.

In summary, the Capital Markets Authority has been at the center of the major transformations in Kenya’s capital markets. Its regulatory oversight and developmental initiatives have been vital in deepening Kenya’s capital markets over the past three decades.


The Capital Markets Authority has undoubtedly played an integral role in cultivating robust and efficient capital markets in Kenya. Its regulatory framework and oversight has been key in enhancing transparency, governance, integrity, innovation and investor confidence in the Kenyan capital markets.

Going forward, the Authority is focused on consolidating the gains made, closing existing gaps, harnessing technology and implementing new reforms that will catapult Kenya’s capital markets to greater heights. With the continued stewardship of the CMA, the future remains bright for Kenya’s capital markets as it strives to support the country’s socio-economic growth through efficient mobilization and allocation of capital.