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E-mail: oak@fib.co.ke
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Address: Crawford Business Park,
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OAK Special Fund is a Leveraged Asset Allocation Fund domiciled in Kenya. It offers investors a unique opportunity to access both local and global markets. The fund is managed by Faida Investment Bank and is licensed by the Capital Markets Authority as a Special Collective Investment Scheme (CIS).
Key Information
Inception Date: February 2024
Base Currency: Kenya Shilling (KES)
Minimum Investment: KES 1,000,000
Minimum Top-up: KES 100,000
Lock-in Period: 6 months
Fund Manager: Faida Investment Bank
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In this segment of the CTA MasterClass - Class in Session (CiS), Rina Hicks introduces the Capital Markets Authority (CMA) and explains its crucial role in regulating the capital markets in Kenya and beyond. She also touches on the importance of verifying investment opportunities and the role of Collective Investment Schemes (CIS).
Who is the Capital Markets Authority (CMA)?
The Capital Markets Authority (CMA) is the regulatory body or "police" of the capital markets in Kenya. Its role is to oversee and regulate all activities in the financial markets to ensure they operate within established standards and regulations. Every country with capital markets has a similar regulatory body, such as the Securities and Exchange Commission (SEC) in the U.S. or the Capital Markets Authority Uganda.
The CMA in Kenya was established by an Act of Parliament and operates under the department of the National Treasury and Economic Planning. Its responsibilities include:
Licensing market players: The CMA licenses investment banks, stockbrokers, fund managers, and other financial institutions. This ensures that all players in the market meet specific standards and operate within legal frameworks.
Investor protection: The CMA safeguards investors by enforcing rules that protect them from manipulation and other unethical practices in the market. For example, it oversees insider trading and ensures that minority investors are not taken advantage of by larger entities.
Market regulation and surveillance: The CMA monitors trades to ensure that the market operates efficiently. It tracks trading patterns to detect any suspicious activity that could indicate manipulation or unfair practices.
Education and literacy: Another critical role of the CMA is to educate the public about the capital markets. They run roadshows, webinars, and online resources to inform Kenyans about investing, financial markets, and how to participate safely.
Do They Play a Role in Global Market Investing?
While the CMA’s primary focus is on Kenya's capital markets, it plays an important role for local investors who wish to invest in global markets. Any investment bank, fund manager, or financial advisor dealing with global investments must be licensed by the CMA. This helps ensure that the advice and products being offered are legitimate and regulated.
Moreover, the CMA has surveillance measures in place to ensure that licensed institutions do not mislead investors or offer unapproved products. For instance, if a company is promoting a global investment product, you can verify their legitimacy by checking if they are licensed by the CMA. You can also check whether the specific product is listed on the CMA’s website.
The Role of CMA in Product Regulation
Beyond just licensing companies, the CMA also regulates the financial products these institutions offer. Before a company can launch a product, like a money market fund or a bond, they must submit detailed documentation, such as investment policy statements or information memorandums, to the CMA. These documents outline the fund's purpose, the types of assets it will invest in, and the risk profile. The CMA reviews these documents to ensure that the fund operates within legal and ethical guidelines.
Verifying Investment Opportunities
As Rina suggests, when considering any investment, it is essential to check if the company offering the product is licensed by the CMA. This can be done by visiting the CMA’s website or asking the company for their license certificate. Additionally, you should verify if the specific product being offered is listed with the CMA to ensure it’s legitimate. This extra layer of due diligence helps protect you from falling into unregulated or fraudulent schemes.
However, Rina advises going a step further by asking questions about how the company operates and manages the product. This includes asking about the asset allocation, the markets they invest in, and the level of risk involved. Even licensed companies can occasionally break the rules to offer higher returns, so it's crucial to dig deeper.
