[2008-09-16]  CMA grants service licences to two firms
The Capital Markets Authority (CMA) has approved the issuance of licences to two financial services firms to operate as an investment adviser and an authorized depository.

The market regulator last month granted Finconsult Company Limited an Investment Adviser licence while Equatorial Commercial Bank was issued a licence to operate as an Authorised Depository.

The licences will be effective August 28, 2008 and are due for renewal on December 31, 2008. An investment advisor is a firm that advises clients on investment matters on a professional basis.

According to CMA regulations, an investment advisor compiles analysis and research on capital markets securities, and advises investors on such securities at a fee.

Investment advisors also manage portfolios of securities on behalf of clients pursuant to a contract, but the aggregate maximum value of all clients’ portfolio managed under the investment adviser’s licence shall not exceed Sh10 million. Equatorial Commercial Bank Limited is now authorised to operate as an Authorised Depository as provided in the Capital Markets Act and regulations issued.

Interest in the capital markets continues to pick up as investors seek sources of wealth creation. This has led to the convergence of financial services under one roof, with a number of banks venturing into investment services.

The foray by banks to investment management services comes at a time when Kenyans are more disposed to the equity markets and are seeking tidy returns by investing in firms listed at the Nairobi Stock Exchange (NSE).

An Authorised Depository otherwise referred to as a custodian is a commercial bank or a financial institution, approved by the market regulator to hold in custody funds, securities, financial instruments or documents of title to assets registered in the name of local investors, East African investors, or foreign investors or an investment portfolio.

Custodians are expected to render custodial services to the investment portfolio in accordance with the written service agreement between the custodian and the investment adviser or fund manager.


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