A Securities Exchange Operator Licence allows an entity to establish and run a marketplace for trading securities in Kenya — the role currently held by the Nairobi Securities Exchange (NSE). This licence is issued and supervised by the Capital Markets Authority (CMA) under Section 23(2) of the Capital Markets Act, and is among the most heavily capitalised and scrutinised licence categories in the capital markets space.
CMA Fee Schedule for Securities Exchanges
| Charge | Amount (KES) |
|---|---|
| Application Fee | 100,000 |
| Licensing Fee | 200,000 |
| Annual Regulatory Fee | 1% of gross earnings (excluding transaction fees) |
The annual fee structure is unique among CMA licensees: rather than a fixed shilling figure, exchanges pay a percentage of their gross earnings, excluding transaction-based revenue, reflecting the scale and commercial nature of exchange operations.
Why the Fee Is Structured This Way
Securities exchanges are revenue-generating commercial entities whose earnings fluctuate with market activity. A percentage-of-earnings model ties the regulatory fee to the exchange’s actual capacity to pay, rather than imposing a flat charge that could be disproportionate in slow trading years.
Core Requirements
- Minimum core capital and net worth thresholds set by CMA
- Robust trading, clearing, and settlement infrastructure
- Demonstrated systems for market surveillance and investor protection
- Fit-and-proper directors and senior management
- A self-regulatory framework (since exchanges also supervise their own members)
Application Steps
- Submit application with supporting governance and technical documentation
- Pay the KES 100,000 application fee
- CMA conducts a detailed technical and capital adequacy review
- Pay the KES 200,000 licensing fee upon approval
- Remit 1% of gross earnings (excluding transaction fees) annually thereafter
Given the systemic importance of exchanges to market integrity, this licence category carries the highest barriers to entry of any CMA licence. The KES 300,000 combined application-and-licensing cost is modest relative to the capital and infrastructure investment actually required to run an exchange.
