The Capital Market Authority of Kenya has released for consultation the Draft Council Directives for the proposed Harmonised East African Community Capital Markets Legal and Regulatory Framework.

The EAC Common Markets Protocol, effective July 1, 2010, prioritizes regionalization of the East African Capital Markets with the aim of providing an opportunity for the growth and deepening of the capital markets in the region to promote economic growth. The objectives of the EAC Monetary Union Protocol, effective 30th November 2013, complement those of the EAC Common Market Protocol in that the Protocol seeks to promote and maintain monetary and financial stability aimed at facilitating economic integration to attain sustainable growth and development of the Community. The EAC Monetary Union Protocol requires the implementation of the EAC Common Market Protocol as a pre-requisite to the realization of the monetary union.

The EAC regionalization strategy for the capital markets recommended the mechanism for integrating the legal and regulatory environment should be through harmonization of national requirements rather than the enactment of a single overarching regime. Each country will recognize the regulatory regime of other countries through harmonization of policies and approximation of laws. The regionalization process has taken into consideration that the EAC capital markets are at different levels of development and that an overarching EAC Community law would only be feasible in the long term after a high degree of convergence between the different EAC capital markets has been attained. These harmonized laws are developed in the form of EAC Council of Ministers Directives by the CMA, NSE and CDSC together with their peer institutions in the EAC region.

The first set of seven EAC Council Directives developed in 2013 were issued by the EAC Council of Ministers on 28th April 2014. All the EAC Partner States are now in the process of transposing the Directives into their respective national legal frameworks.

The second set of eight draft Council Directives, which were subjected to public consultation between 13th June and 13th July 2014, are now under consideration for adoption through the EAC structures.

The third set of eight Draft Council Directives are now ready for stakeholder consultation. The Directives cover Credit Rating Agencies, Evaluative and Analytical Services, Regulated Activities, Regulatory Authorities, Real Estate Investment Trusts, Securities Exchanges; Central Securities Depositories and Business Continuity.

The Capital Markets Act and the Statutory Instruments Act have commenced stakeholder and public consultation. The consultation will close on 10th March 2015.

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