Was established in 1990 by an Act of Parliament to assist in creation of a conducive environment for growth and development of capital markets in Kenya.
Role of CMA
1. To remove bottlenecks and create awareness for investment in long term securities
2. To serve as efficient bridge between the public and private sectors
3. Create an environment which will encourage local companies to go public
4. To grant approvals and licenses to brokers
5. To operate a compensation fund to protect investors from financial losses should licensed brokers fail to meet their contractual obligation
6. Act as a watchdog for the entire capital market system
7. To establish operational rules and regulations on placement of securities
8. To implement government programs and policies with respect to the capital markets.
Apart from the above roles, CMA can undertake the following steps to encourage development of stock exchanges in Kenya or other countries.
1. Removal of Barriers on security transfers
2. Introduce wider range of instruments in the market
3. Decentralization of its operations
4. Encourage development of institutional investors such as pension funds, insurance firms etc.
5. Provide adequate information to players in the market in order to prevent insider trading
6. License more brokers.
Role of CMA in determination of share prices
1. The CMA does not in any way influence share price of quoted companies.
2. The prices of such securities is determined by the demand and supply mechanism
3. However, CMA may:
4. Advice the company on the issue price of new securities
5. Alert the investors if it feels that the issue price of certain securities is not in their interest
6. It guards against manipulation of share prices and insider trading.