KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Valere Nyaboke, Cliffe Dekker Hofmeyr
6.4 Listing Standards The listing of shares (stocks) and fixed‑income securi - ties (such as bonds) on a securities exchange in Kenya is governed by several key regulations and guidelines. The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations, 2002 This is the primary legal framework issued by the Capital Markets Authority. It sets out the fundamental requirements and procedures that issuers must follow when offering and listing their securities on a securi - ties exchange in Kenya. Nairobi Securities Exchange (NSE) Listing Rules These rules apply specifically to the listing of secu - rities on the NSE. While aligned with the Capital Markets (Securities) (Public Offers, Listing and Dis - closures) Regulations, they provide more detailed, segment‑specific requirements and procedures. The NSE Listing Rules cover the following market seg - ments. • Main Investment Market Segment (MIMS) – designed for large, well‑established companies with a strong, proven operational and financial track record. • Alternative Investment Market Segment (AIMS) – offers more flexible listing conditions to accommo - date small and medium‑sized enterprises (SMEs). • Fixed Income Securities Market Segment (FISMS) – facilitates the listing and trading of fixed‑income securities, primarily corporate bonds and govern - ment bonds. • Growth Enterprises Market Segment (GEMS) – caters to high‑growth companies and start‑ups, enabling them to access the capital markets even without a long profitability history. 6.5 Order Handling Rules The handling of orders is governed by the Capital Mar - kets (Conduct of Business) (Market Intermediaries) Regulations, 2011, which set out specific obligations for market intermediaries when acting on behalf of clients. These obligations include the following. • Executing client orders in the chronological order in which they are received, and ensuring that out - standing orders are given priority.
• Allocating all executed transactions to the clients who placed the orders in a timely and equitable manner. • Refraining from executing any order unless the client has made sufficient arrangements for the necessary funds or securities. • Where a market intermediary aggregates a client’s order with its own account transaction or with another client’s order, ensuring that the subsequent allocation does not give unfair preference to itself or to any particular client. If all orders cannot be fully satisfied, priority must be given to fulfilling cli - ent orders. • Avoiding any own-account transactions in rel - evant securities, or in related investments, when the intermediary has a pending client order or intends to issue price‑sensitive recommendations, research, or analysis to clients. This restriction applies until the client order is executed or until the intended clients have had, or are reasonably likely to have had, sufficient opportunity to act on the information. 6.6 Rise of Peer-to-Peer Trading Platforms Peer‑to‑peer (P2P) cryptocurrency trading platforms have become increasingly popular in Kenya. However, because they are currently unregulated, Kenyan users lack legal protection if these platforms fail or cease operations. The VASPA seeks to address this gap by introducing regulatory oversight for P2P trading plat - forms, requiring them to obtain a licence as virtual asset service providers in order to operate legally. 6.7 Rules of Payment for Order Flow There are no explicit rules that either permit or prohibit payment for order flow. However, such practices may be restricted if they undermine the integrity of a secu - rities exchange or violate legal requirements under the Capital Markets (Conduct of Business) (Market Inter - mediaries) Regulations, 2011, or the rules established by a securities exchange (such as the NSE). 6.8 Market Integrity Principles When conducting a regulated activity, a market inter - mediary must apply the principles of best practice. These include maintaining a high standard of integ - rity and fair dealing, acting with due skill, care and
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