Capital markets regulator tightens noose around fraudsters

By James Anyanzwa

Fraud at the Nairobi Securities Exchange (NSE) could reduce after the Capital Markets Authority (CMA) set in motion plans to enhance surveillance.

This comes after the regulator signed an agreement with InfoTech Middle East for the implementation of the ‘Capizar Market Surveillancesystem at a cost of Sh48 million.

The system, scheduled for completion in October, will identify unusual trading patterns that violate trading rules.

The out-going CMA Chief Executive Stella Kilonzo said the system has pre-configured rules to determine common trading patterns that constitute market abuse, including front running and insider trading.

It is also capable of undertaking multiple analyses by rapidly identifying abnormal trading behaviour which will be saved to assist in investigations.

The move is part of the authority’s efforts to restore investor confidence in the market.

The authority previously conducted surveillance through a market control system that was provided by the trading platform vendors. The system has, however, been found to be inadequate for a sophisticated market.

"The decision to set up an advanced and enhanced surveillance system is informed by evolving sophistication in the market and that this will enhance the Authority’s investor protection initiatives through its ability to identify and prevent market malpractice," said Kilonzo.

 

‘CMA has stepped up its oversight role to ensure real time surveillance and any irregularities in trading are identified and curbed early enough."