Contents
The Capital Markets Authority (CMA) is the statutory agency responsible for regulating and supervising the capital markets in Kenya. As part of its mandate, it oversees the licensing and compliance of online forex brokers operating within the country. The CMA’s involvement in the retail forex industry is relatively recent but increasingly important, as forex trading gains popularity among individual investors and speculators.
In the context of global retail forex markets, where offshore brokers dominate and regulatory oversight is inconsistent across jurisdictions, the CMA represents a local framework designed to protect Kenyan traders from fraud, malpractice, and operational risk. Its role is not only supervisory but also preventative, aiming to create a more stable and transparent environment for those participating in leveraged currency trading.
You can find a list of CMA regulated brokers by visiting forex.ke or you can go to licensees.cma.or.ke to check if a broker is CMA regulated.
Legal Mandate and Structure
The CMA was established under the Capital Markets Act (Cap 485A) of Kenyan law. Its broader role is to promote the development of fair and efficient capital markets and to protect investor interests. In recent years, this mandate has expanded to include the regulation of online forex brokers, following the increase in retail trading activity across Kenya.
To operate legally as a non-dealing forex broker in Kenya, a firm must be licensed by the CMA. This status allows a broker to facilitate trades on behalf of clients without taking the opposite side of those trades. By contrast, dealing desk models—where the broker acts as the counterparty—are generally not permitted under current CMA rules for retail forex activity. This limitation is designed to avoid conflicts of interest and ensure that execution is transparent and based on market conditions.
The CMA requires applicants to meet several operational and financial standards, including capital adequacy, segregation of client funds, regular financial reporting, and the appointment of qualified personnel to key management roles. The goal is to ensure that brokers are financially stable and capable of managing client orders and risks responsibly.
Client Protection and Broker Oversight
One of the core functions of the CMA in the forex sector is to protect retail traders from exploitation and misconduct. In an environment where unlicensed offshore platforms continue to solicit business through social media and unregulated websites, the presence of a national regulator provides a layer of recourse that otherwise would not exist.
Licensed brokers under the CMA must adhere to guidelines regarding marketing, disclosure of risk, leverage limits, and fund security. They are required to display their licensing status clearly and inform clients of the risks associated with leveraged trading. These rules are designed to reduce misinformation and set expectations before trading begins.
The CMA also has powers to investigate complaints, conduct audits, and take enforcement action against licensed entities that violate its rules. For traders dealing with a CMA-regulated broker, this means that issues such as withdrawal delays, pricing irregularities, or platform manipulation can be formally escalated to a domestic authority with enforcement powers.
Leverage and Margin Controls
As part of its regulatory responsibilities, the CMA sets leverage limits to prevent excessive risk-taking by retail clients. While offshore brokers may offer leverage ratios of 1:500 or higher, CMA-regulated brokers must comply with lower caps, typically in the range of 1:50 to 1:100 depending on account type and product.
These limits reflect a broader global trend among regulators aiming to reduce the probability of retail clients suffering total loss of capital due to leveraged trades. By restricting leverage, the CMA aligns itself with frameworks used by other major regulatory bodies, such as ESMA in the EU or ASIC in Australia.
Margin requirements are also monitored. Brokers must notify clients of margin levels and have clear policies in place for margin calls and stop-outs. These requirements help prevent sudden liquidations or unchecked exposure that can quickly destabilise a trader’s account.
Challenges and Limitations
While the CMA has made progress in establishing regulatory control over Kenya’s retail forex sector, several challenges remain. The first is limited market coverage. The number of CMA-licensed brokers is small relative to the number of offshore platforms operating in the country. Many Kenyan traders continue to use foreign brokers for reasons including wider product offerings, higher leverage, or better marketing.
Enforcement against unlicensed brokers is also difficult, especially when these entities are based abroad and solicit business through digital channels. The CMA can issue public warnings, but it lacks jurisdiction to shut down foreign operations or retrieve lost funds on behalf of Kenyan clients trading on offshore platforms.
There is also a knowledge gap among traders. Many are unaware of the regulatory differences between licensed and unlicensed brokers, and some equate offshore regulation with domestic protection. While some offshore brokers are legitimate and well-regulated elsewhere, the absence of CMA jurisdiction means Kenyan clients bear more risk and have fewer options for complaint resolution.
Strategic Importance and Future Role
As forex trading continues to grow in Kenya, the CMA is positioned to play a central role in shaping how the market evolves. Its licensing and compliance regime provides a foundation for increased investor confidence and paves the way for further development of domestic financial services infrastructure.
The CMA’s long-term success will depend on several factors. First, it must continue to update its regulatory framework in line with international best practices. Second, it will need to expand its capacity to supervise licensed entities and respond to new business models and technologies. Third, public education and transparency around regulation will be critical in shifting traders away from unregulated platforms and toward compliant brokers.
Creating a well-regulated, transparent forex environment will also open the door to future integration of other financial instruments, such as CFDs or listed derivatives, under appropriate local rules. This could lead to greater product diversity, professionalisation of the trading sector, and stronger capital markets overall.
This article was last updated on: May 26, 2025