KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Valere Nyaboke, Cliffe Dekker Hofmeyr
3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Currently, one of the licensed robo-advisers is a leg - acy player (Standard Investment Bank) and it needed to seek approval for the implementation of the solution through the CMA Sandbox given the lack of existing regulation on robo-advisers. 3.3 Issues Relating to Best Execution of Customer Trades There are currently no specific regulations that pre - scribe how robo‑advisers must execute customer trades. However, because robo‑advisory services are provided by licensed market intermediaries, these intermediaries are required to comply with the Capi - tal Markets (Conduct of Business) (Market Intermedi - aries) Regulations, 2011. Under these regulations, a market intermediary must: • deal for a client on the best terms available to that client; • refrain from executing an order unless the client has made sufficient arrangements for the neces - sary funds or securities; and • ensure that all transactions executed are allocated to the clients who placed the orders in a timely and equitable manner. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities There are no major differences in how loans are regu - lated for individuals, small businesses, or other bor- rowers. Instead, variations in Kenyan lending regula - tions arise primarily from the source of the funds being used for lending. The key factor in determining regulatory requirements is whether the loans are issued using customer depos - its. Under the Banking Act, both “banking business” and “finance business” are regulated activities. Each involves: • accepting money on deposit from the public, which must be repayable on demand; and
approval from the Capital Markets Authority. A com - parable position applies in the insurance sector, where offshore insurance providers must obtain authorisa - tion before offering their products or services locally. In the banking sector, there have historically been no explicit restrictions on reverse solicitation. However, recent amendments to the Central Bank Act have introduced circumstances in which an offshore pro - vider of banking products or services may now be required to seek regulatory approval from the Central Bank of Kenya before offering such products or ser - vices in Kenya. The Virtual Asset Service Providers Act does not expressly address or impose restrictions on reverse solicitation in relation to virtual assets. 3. Robo-Advisers 3.1 Requirement for Different Business Models As there are currently no specific regulations govern - ing robo‑advisers in Kenya, there are likewise no pre - scribed business models that must be adopted for robo‑advisory services. However, the Capital Markets Authority has taken steps toward regulating robo‑advisers involved in the provision of investment services. Through the CMA Regulatory Sandbox, the Authority has issued letters of no‑objection to two entities – FourFront Manage - ment Limited and Waanzilishi Capital Limited – allow - ing them to offer automated, algorithm‑driven financial planning services with limited or no human interven - tion. It is important to note that these letters of no‑objection were granted on the basis that both entities already hold the appropriate licences. FourFront Management Limited operates as a division of Standard Investment Bank, a licensed investment bank in Kenya, while Waanzilishi Capital Limited is registered as a fund manager. Under the Capital Markets Act, both invest - ment banks and fund managers are empowered and authorised to provide investment advice to customers in Kenya.
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