Trade in Online Foreign Exchange at your own risk- CMA Warns

CMA director and Policy Luke Ombara and CEO Paul Muthaura IMAGE/COURTESY

You will not be protected by law when you lose your investments in online foreign exchange trading, Capital Markets Authority has warned.

In a statement to the Press, the Authority has cautioned Kenyans against trading through platforms of unlicensed entities noting that they are doing it at their own risk.

Further, CMA called on  all online foreign exchange brokers or money managers not licensed by the Authority to cease and desist from trading, conducting sensitizations in Kenya and onboarding Kenyan investors or managing online foreign exchange portfolios.

”In accordance with provisions of Section 23(1) of the Capital Markets Act and the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017, the Capital Markets Authority (CMA) has issued only one license to EGM Securities Limited (formerly Execution Point Limited) to operate as a Non – Dealing Online Foreign Exchange Broker”. CMA Chief Executive, Paul Muthaura said.

Muthaura, pointed out that the Authority has regulatory oversight over all entities offering online foreign exchange brokerage services in Kenya, which includes supervision of such entities.

He observed several individuals and entities are carrying on or purporting to carry on the business of an online foreign exchange broker or a money manager without the relevant license by the Authority.

According to the Capital Markets Act, section 23 (1), ” No person shall carry on business as online forex broker or hold himself out as carrying on such a business unless he holds a valid license issued under this Act or under the authority of this Act”.

Mr Muthaura added that as per the provisions of the Regulation 3 of the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017; ”A person shall not carry on or purport to carry on business as a dealing online foreign exchange broker, non-dealing online foreign exchange broker or a money manager unless that person has been granted the relevant license by the Authority.

Besides that, a person who carries on or purports to carry on business as a dealing online foreign exchange broker, non-dealing online foreign exchange broker or a money manager without the relevant license commits an offence and risks criminal prosecution”.

Members of the public who have been affected or become aware of such illegal online foreign exchange transactions are advised to report to the Authority or to the Capital Markets Fraud Investigation Unit.