CMA extends approval to the Nairobi Coffee Exchange

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A file image of Capital Markets Authority (CMA) CEO Wycliffe Shamiah.

The Capital Markets Authority (CMA) has extended the in-principle approval granted to the Nairobi Coffee Exchange (NCE) to continue operating as a coffee exchange to April 30, 2023.

The approval, which had been extended to 31 December 2022, was granted in accordance with the Capital Markets (Coffee Exchange) Regulations, 2020, with the understanding that NCE will work towards full compliance with the Coffee Exchange Regulations.

This is expected to give impetus to the ongoing coffee sub-sector reforms.

CMA Chief Executive Officer, Wyckliffe Shamiah, observed that the key requirements for NCE stipulated in the Coffee Exchange Regulations include; Onboarding a Direct Settlement System provider to expedite and enhance transparency in settlement of coffee sale proceeds and submission of trading rules aligned to the Coffee Exchange Regulations to guide the trading operations at the NCE;

Strengthening the governance structure by reconstituting the NCE board to comply with the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations, 2011 is also a requirement according to Shamiah.

He added that NCE is expected to immediately admit entities holding valid coffee broker licenses issued by CMA to the trading floor.

The brokers holding valid licenses are; United Eastern Kenya Coffee Marketing Company; Meru County Coffee Marketing Agency Limited; Kipkelion Brokerage Company Limited; Mt. Elgon Coffee Marketing Agency; Murang’a County Coffee Dealers Limited; and Embu Coffee Farmers Marketing Agency Limited.

“CMA continues to engage all stakeholders in the coffee sub-sector to ensure that the momentum of the reform agenda is sustained and gains traction towards full implementation of the Coffee Exchange Regulations,” said Shamiah.

“This is expected to ensure the marketing and trading mechanism at the Coffee Exchange promote s fair trade, is transparent and enhances price discovery, ultimately benefitting the coffee farmers.”

He also welcomed the recent decision by the Agriculture and Food Authority to withdraw the amendments to the Crops (Coffee) (General) Regulations, 2019 which had slowed down the reform process by removing CMA from regulating the marketing and trading aspects at the Coffee Exchange.

The Capital Markets Act was amended in 2016 giving CMA the mandate to regulate spot commodity markets including the coffee commodity market.

CMA regulates the structured spot commodity markets in Kenya and in particular, the coffee commodity market according to Section 11(3) of the Capital Markets Act.

This ensures there is a clear regulatory framework to support the coffee sub-sector reform agenda.

ALSO READ: CMA to support Nairobi City County Government to issue a green bond

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