Business Daily (Kenya)
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Capital Markets Authority chief executive Paul Muthaura. PHOTO | FILE

ByBRIAN NGUGI, bnjoroge@ke.nationmedia.comPosted Friday, October 21 2016at 11:24

The Capital Markets Authority of Kenya (CMA) and the Australian Securities and Investments Commission (ASIC) have signed a co-operation agreement aimed at promoting innovation in financial services in their respective markets.

The pact sets up a framework for co-operation between the CMA and ASIC in supporting innovation in financial technology services.

In an announcement made by the Kenyan regulator Friday, the parties said they have agreed to share information in their respective markets including on emerging market trends and regulatory issues arising from the growth in fintech.

“We are committed to facilitating innovation in financial services, leveraging Kenya’s positioning in the region as an innovation centre. This however calls for us to assess lessons learned and to compare strategies to balance innovation and regulation with our peer regulators,” said CMA chief executive Paul Muthaura.

Test new products, services

Mr Muthaura noted that the CMA has recently moved towards the establishment of a regulatory sandbox structure that is designed to encourage innovation in the capital markets.

A regulatory sandbox is a safe space in which innovators can test new products and services in a normal environment without the risk of consequences from regulators like the CMA.

It is usually availed to businesses to experiment with new fintech solutions with relaxed regulatory requirements.

“This strategy reflects the CMA’s role in facilitating the introduction of new fintech products in the capital markets area,” he said, adding that ASIC has equally developed an innovation hub with both regulators keen to share best practices.

ASIC chairman Greg Medcraft said Kenya has seen significant fintech innovation growth and hoped the agreement will help to break down entry barriers in both jurisdictions.

“Since ASIC launched its innovation hub in 2015, we have seen a surge in requests by fintech start-ups seeking assistance about how to navigate the regulatory requirements. Most recently we have consulted on the establishment of a Regulatory Sandbox that proposes an environment to allow start-ups to test concepts without a licence we are currently considering the results of that consultation,” he said.

The agreement was signed on the sidelines of a board meeting by the International Organization of Securities Commissions (IOSCO) held in Hong Kong this week.

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