KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Sara Ndei, Cliffe Dekker Hofmeyr incorporating Kieti Law LLP
Regarding virtual assets, the current draft of the VASPs Bill does not explicitly restrict reverse solicitation. Nonetheless, it is anticipated that, as the Bill evolves, the approach adopted may align more closely with existing regulations in other financial sectors. 3. Robo-Advisers 3.1 Requirement for Different Business Models As there are specific robo-adviser regulations in Kenya, there are no prescriptions on business models to be adopted in relation to robo-advis - ers. However, the CMA has taken steps in relation to the regulation of robo-advisers for the provision of investment services. In this regard, the CMA has, through the CMA Sandbox, issued letters of no-objection to two entities (FourFront Manage - ment Limited and Waanzilishi Capital Limited), allowing them to provide automated, algorithm- driven financial planning services with limited to no human intervention. It should be noted that the letters of no-objection are issued on the back of licences issued to the two entities – FourFront Management Limited is a division of Standard Investment Bank, a licensed investment bank in Kenya, and Waanzilishi Capi - tal Limited is registered as a fund manager. Both investment banks and fund managers have the power and authority under the Capital Markets Act to provide investment advice to customers in Kenya. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Currently, one of the licensed robo-advisers is a legacy 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 regulations prescribing how robo-advisers can best execute customer trades. However, as robo-advisory services are currently provided by licensed market interme - diaries, the market intermediaries would need to comply with the Capital Markets (Conduct of Business) (Market Intermediaries) Regulations, 2011, which require a market intermediary to: • deal for a client on the best terms available for the client; • not execute an order unless the client has made sufficient arrangements for the neces - sary funds or securities; and • ensure that transactions it executes are allo - cated to the clients who gave 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 significant differences in the busi - ness or regulation of loans to individuals, small businesses and others. Differences in Kenyan lending regulations exist based on the source of funds. The key element for the regulation of loans is whether the loans are made from customer deposits. Under the Banking Act, “banking business” and “finance business” are regulated activities, which both involve:
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