Kenya CMA Introduction of New Levy on Online Forex Brokers

Kenya's National Treasury has introduced a new regulatory fee for online forex brokers, amending the Capital Markets (Online Forex Exchange Trading) Regulations, 2017 to enhance investor protection in the CFD market.

The New Levy

Annual fee on gross trading revenue for both dealing and non-dealing online forex brokers operating in Kenya.

Fee Base Definition

Gross trading revenue includes all commissions and rebates from third-party service providers. This applies to both dealing and non-dealing online forex brokers.

Purpose

Enhance investor protection for CFD products

Balance risks for losses vs revenues

Bolster regulatory oversight of trading

Fund CMA supervision activities

Legal Framework

The fee provision was inserted via Legal Notice 160 of 2023, amending the original Capital Markets (Online Foreign Exchange Trading) Regulations, 2017 (Legal Notice 226 of 2017).

Affected Entities

Dealing brokers (market makers)

Non-dealing brokers (STP/ECN)

Local and foreign-licensed entities in Kenya

Implications for Brokers

Licensed forex brokers operating in Kenya should:

Review current revenue structures to calculate levy obligations

Update financial projections to account for the new fee

Ensure proper recording of gross trading revenue including rebates

Consider pricing and margin adjustments if necessary