KENYA Law and Practice Contributed by: Sammy Ndolo, Njeri Wagacha, Brian Muchiri and Sara Ndei, Cliffe Dekker Hofmeyr incorporating Kieti Law LLP
mediaries) Regulations, 2011, which impose cer - tain requirements on a market intermediary when handling orders on behalf of a client, including: • executing client orders in the chronological sequence in which the orders were received, and giving priority to outstanding orders; • ensuring that all transactions that it executes are allocated to the clients who gave the orders in a timely and equitable manner; • not executing an order unless the client has made sufficient arrangements for the neces - sary funds or securities; • if a market intermediary has aggregated an order for a client’s transaction with an order for its own account transaction, or with an order for another client’s transaction, in the subsequent allocation, not giving unfair pref - erence to itself or to any of the clients, and giving priority to satisfying orders for client transactions, if all orders cannot be satisfied; and • where a market intermediary has a client order to execute, or where it intends to give clients a price-sensitive recommendation or research or analysis, not knowingly effecting an own account transaction in the securities concerned or in any related investment until the order has been executed or until the cli - ents for whom the publication was principally intended have had, or are likely to have had, a reasonable opportunity to react to it. 6.6 Rise of Peer-to-Peer Trading Platforms Peer-to-peer (P2P) cryptocurrency trading plat - forms have gained significant popularity in Ken - ya. Currently unregulated, these platforms leave Kenyan users without legal protection should the platforms experience failures or cease opera - tions. However, the proposed VASP Bill aims to address this issue. If passed, the bill would
regulate P2P trading platforms, 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 express rules permitting or prohibit - ing payment for order flow. However, such activi - ties may be prohibited if they are detrimental to the integrity of a securities exchange or run afoul of legal requirements under the Capital Markets (Conduct of Business) (Market Intermediaries) Regulations, 2011 or rules prescribed by a secu - When conducting a regulated activity, a market intermediaryis required to apply the principles of best practice. These include observing a high standard of integrity and fair dealing, acting with due skill, care and diligence, and observing high standards of market conduct. A market intermediary is also required to adhere to the following principles: rities exchange (such as the NSE). 6.8 Market Integrity Principles • ensuring that any agreement, written com - munication, notification or information that it gives or sends to clients to whom it provides a service is presented fairly and clearly; • ascertaining if any of its clients are insiders and maintaining records that assist it to moni - tor insider dealing; • holding its clients’ funds in trust for and on behalf of the clients and segregating its cli - ent bank accounts from any account holding funds belonging to the market intermediary; and • avoiding any conflict of interest between itself and a client.
468 CHAMBERS.COM
Powered by FlippingBook