Financial Markets Law – KASNEB Syllabus

PAPER NO.14  FINANCIAL MARKETS LAW

GENERAL OBJECTIVE

This paper is intended to equip the candidate with the knowledge, skills and attitudes that will enable him/her to comply with the laws and regulations governing financial markets.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

• Comply with the legal provisions relating to financial markets
• Comply with the licensing regulations of the securities exchange
• Comply with the guidelines and rules of the central depository system
• Identify the offences and penalties relating to trading in securities
• Demonstrate an understanding of the processes and law of anti money laundering
• Maintain securities registers, accounts and records

CONTENT

Regulation of financial services

• Historical development of law and regulation governing financial
• Need for regulation
• Regulatory strategies in financial services
• Financial regulators
• Central Bank of Kenya
• Capital Markets Authority
• Deposit Protection Fund
• Insurance Regulatory Authority
• Retirement Benefits Authority
• Sacco Societies Regulatory Authority
• Institute of Certified Investment and Financial Analysts (ICIFA)
• Professional bodies in financial services
• Regulations in the international financial markets
• The International Organisation of Securities Commissions (IOSCO) principles for self regulation

Regulation of capital markets

• Capital Markets Authority
• Investor Compensation Fund Board
• The Capital Markets Tribunal
• The Capital Markets Fraud Investigations Unit
• The International Organisation of Securities Commissions principles relating to the regulator

Regulation of financial services intermediaries

• Stockbrokers
• Stock dealers
• Investment banks
• Investment advisers
• Fund managers
• Credit rating agencies
• Collective Investments Schemes
• Custodians
• The International Organisation of Securities Commissions principles for credit rating agencies, collective investment schemes and market intermediaries

Central depository system

• The Central Depository and Settlement Corporation
• Establishment of the central depository
• Duties of a central depository
• Central depository agents
• Penalties for breach of duty
• Security measures
• Disclosure of information by central depository agents
• Central Depository Guarantee Fund

Immobilisation and dematerialisation

• Meaning
• Prescription of securities for immobilisation
• Transfer to a central depository or nominee company
• Operation of securities account
• Restriction of trade in eligible securities

Raising capital in the securities market

• Private offers/private placements
• Public offers
• Prospectus /information memorandum
• The International Organisation of Securities Commissions(IOSCO) principles relating to the issuer

Securities exchange

• Establishment
• Membership
• Rules of the securities exchange
• Listing requirements
• Self listing of the exchange
• Cross border listing

Securities transactions

• Book entry of transactions and prohibition
• Records of depositors
• Suspended securities
• Charging or mortgaging of securities
• Bonus and rights issue
• Prohibition of dealings in book entry securities
• Insider trading
• The International Organisation of Securities Commissions (IOSCO) principles for enforcement of securities regulation

Securities registers, accounts and records

• Interests in securities
• Restrictions in securities transactions
• Register of interests in securities
• Maintenance of records
• Accounts statements
• Record of depositors
• Audit of accounts, records and registers

Corporate governance

• Meaning of corporate governance
• Application of corporate governance principles in financial markets
• Role of capital market authority in enforcement of corporate governance
• International Organisation of Securities Commissions (IOSCO) principles for cooperation in regulation

Prevention of money laundering

• Meaning of money laundering
• components of money laundering
• Anti money laundering legislation
• The Assets Recovery Agency
• Criminal Assets Recovery Fund
• Prevention of terrorism regulations
• Counter Financing of Terrorism Inter-Ministerial Committee: objectives, functions and powers
• The Financial Reporting Centre: objectives, functions and powers
• Due diligence requirements
• Wire transfers

Emerging issues and trends