Regulations and Market Practice (Kenya) key terms

Kenya's statutory regulator for capital markets, established under the Capital Markets Act. It licenses market intermediaries, approves offers of securities, supervises trading venues and enforces disclosure and market-abuse rules.

The primary legislation governing securities markets in Kenya. It establishes the CMA, sets out licensing and approval requirements, and provides for offences including market abuse and unauthorised dealings.

Kenya's central bank and banking-sector supervisor. It licenses banks, sets prudential rules, conducts monetary policy, oversees payment systems and shares AML/CFT supervisory responsibilities.

The law regulating the business of banking in Kenya. It defines banking business, requires CBK licensing, and empowers the CBK to impose prudential and conduct requirements on banks and their officers.

Rules designed to keep financial firms solvent and stable, such as minimum capital, liquidity and large-exposure limits. In Kenya these are issued mainly by the CBK for banks and by the CMA for capital-market intermediaries.

A measure of a bank's capital expressed as a percentage of its risk-weighted assets. It shows how far losses can be absorbed before depositors are exposed; Kenyan banks must meet minimum thresholds set by the CBK.

The highest-quality capital of a bank, mainly paid-up ordinary shares and disclosed reserves, capable of absorbing losses while the bank continues as a going concern. It forms the numerator of key Kenyan prudential ratios.

The formal process by which a regulator grants a firm permission to carry on a regulated activity. In Kenya, licences are issued by bodies such as the CMA and CBK and are typically subject to fit-and-proper and capital tests.

An assessment of whether directors, controllers and key staff are honest, competent and financially sound. Kenyan regulators apply it at licensing and on an ongoing basis to protect customers and market integrity.

An individual approved by a regulator to perform a controlled function for a licensed firm, such as a chief executive or compliance officer. Approval depends on fitness, propriety and relevant competence.

A firm that stands between issuers and investors, such as a stockbroker, dealer, investment adviser or fund manager. In Kenya such firms require a CMA licence to operate lawfully.

Kenya's principal stock exchange, where equities and fixed-income securities are listed and traded. It operates under CMA oversight and provides the main secondary market for listed securities.

A system that holds securities in electronic book-entry form and records ownership transfers. In Kenya, the CSD supports settlement of trades on the NSE and reduces the need for physical certificates.

The period between trade execution and final transfer of cash and securities. Kenyan market practice has moved to shorter cycles to reduce counterparty risk; the cycle is set by market rules.

The process of confirming, matching and netting trades before settlement, often through a central counterparty. It reduces the risk that one party's default disrupts the market.

An entity that interposes itself between trade counterparties, becoming buyer to every seller and seller to every buyer. It manages counterparty risk through margining and default funds.

Rules that govern admission of securities to a trading venue and the continuing obligations of issuers, such as disclosure of price-sensitive information. In Kenya they are issued by the CMA and applied by the NSE.

A formal document that must be published when securities are offered to the public. It must contain the information investors need to make an informed decision and is subject to regulatory approval.

An offer of securities to the public at large, as opposed to a private placement to selected investors. In Kenya it triggers prospectus and regulatory-approval requirements under the Capital Markets Act.

A sale of securities to a limited number of sophisticated or institutional investors without a public offer. It may avoid full prospectus requirements but remains subject to applicable securities law.

A pooled investment vehicle in which investors' money is managed as a portfolio by a professional manager. In Kenya, CIS operators and managers must be licensed and comply with CMA rules on custody and valuation.

Money and securities held by a firm on behalf of clients. Kenyan conduct rules require segregation from the firm's own assets, proper records and, where applicable, custody arrangements to protect clients on insolvency.

The practice of keeping client money and securities separate from the firm's own assets. It prevents client property from being used to pay the firm's debts and is a core investor-protection requirement.

An institution that safekeeps securities and cash for clients and may provide settlement and corporate-action services. Kenyan custodians are subject to licensing and asset-segregation requirements.

Rules governing how licensed firms treat customers, covering areas such as suitability, disclosure of conflicts, fair marketing and complaint handling. They aim to raise standards beyond mere solvency.

A regulatory principle that firms must deliver fair outcomes for customers throughout the product lifecycle. It covers culture, product design, clear communication and handling of complaints and claims.

The body of law and regulation safeguarding customers of financial services, including disclosure, fair treatment and redress. In Kenya it is promoted by sector regulators and by general consumer-protection legislation.

The documented process by which a firm receives, investigates and resolves customer complaints within set timeframes. Effective procedures are a conduct requirement and a source of management information for regulators.

Measures to prevent criminals from disguising the proceeds of crime as legitimate funds. In Kenya, reporting entities must conduct customer due diligence, monitor transactions and report suspicious activity to the Financial Reporting Centre.

Measures to prevent the raising, moving or use of funds for terrorist purposes. It overlaps with AML but focuses on terrorist financing and is enforced in Kenya through targeted financial sanctions and reporting duties.

Kenya's financial intelligence unit, established under the Proceeds of Crime and Anti-Money Laundering Act. It receives and analyses suspicious transaction reports and shares intelligence with law enforcement and regulators.

A report filed by a reporting institution with the FRC when it knows or suspects that funds are the proceeds of crime or linked to terrorism. Filing in good faith is protected by law.

The process of identifying customers, verifying their identity and understanding their business and risk profile before and during a relationship. It is a cornerstone of Kenya's AML/CFT obligations.

Additional scrutiny applied to higher-risk customers, such as politically exposed persons or those in higher-risk jurisdictions. It may include source-of-funds checks and senior-management approval.

An individual entrusted with prominent public functions, or a close associate or family member. Their position creates higher corruption risk, so firms must apply enhanced due diligence and senior approval.

Asset freezes and restrictions applied to specific individuals or entities designated under sanctions regimes. Kenyan firms must screen customers and transactions and report matches without delay.

The automated or manual checking of customers, beneficial owners and payments against sanctions lists. It is a preventive control that must be calibrated to the firm's risk profile and kept under review.

Trading, or encouraging others to trade, on the basis of inside information not available to the market. It is a form of market abuse prohibited under Kenyan securities law and enforced by the CMA.

Precise, non-public information about a security or issuer that, if made public, would likely significantly affect its price. Handling it improperly can amount to insider dealing or unlawful disclosure.

A broad category of misconduct that undermines market integrity, including insider dealing, market manipulation and unlawful disclosure of inside information. Kenyan regulators investigate and sanction such behaviour.

Conduct that gives false or misleading signals about the supply, demand or price of a security, such as wash trades or spoofing. It is prohibited because it distorts fair price formation.

The ongoing obligation of listed issuers to publish information that is material to investors, such as financial results and changes in control. It supports informed trading and deters insider dealing.

Kenya's principal data-protection statute, governing the collection, use and transfer of personal data. It establishes the Office of the Data Protection Commissioner and gives individuals rights over their information.

The regulator established under Kenya's Data Protection Act to enforce data-protection rules, register data controllers and processors, and handle complaints. It issues guidance and can impose penalties.

Information relating to an identified or identifiable natural person, such as a name, identification number or location data. Its processing is regulated and requires a lawful basis.

The obligation to create and retain accurate records of transactions, client instructions and compliance decisions for set periods. Good records support supervision, investigations and dispute resolution.

The duty not to disclose client or firm information except where permitted or required by law. It applies alongside data-protection rules and is subject to exceptions such as regulatory reporting.