Regulators in the East African region will be carrying out joint inspections on stockbrokers, investment banks and other licensees as part of the process to harmonise the capital markets.

The East African Securities Regulatory Authorities (Easra), the umbrella group for regional regulators, will carry out inspections once a year.

The decision was made by the heads of the respective capital markets regulators at a meeting held last week in Kampala, Uganda. The over-arching aim of the joint inspections is to provide a set of common practices to be applied in the capital market in the region.

“The joint inspections provide a platform for peer review among the East African Community (EAC) capital markets regulators to ensure that there is convergence in market supervision practices. The convergence of market supervision practices is very critical especially where the EAC will still have more than one capital markets regulator providing oversight to the regional capital markets,” Capital Markets Authority (Uganda) acting communications manager Charles Nsamba told the Business Daily.

The inspections will also build capacity for staff in various regulators as they share knowledge.

Staff from regulators in Kenya, Uganda, Rwanda and Tanzania will be involved in the exercises which are expected to begin by the end of this year. Burundi does not yet have a regulator.

The four regulators also agreed to set up a permanent secretariat in Dar es Salaam that will be hosted by Tanzania’s Capital Markets and Securities Authority.

“The setting up of a permanent secretariat is expected to ease the process of coordinating the activities of the regional body and facilitate the implementation of resolutions passed,” said Easra in a statement.

Easra has also been harmonising rules that will make it possible for regional Initial Public Offerings (IPOs), issuance of bonds and licensing of stockbrokers.
Most of the rules were drafted in 2013, but are yet to be enacted.

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Member regulators also agreed to put caps on licence fees for brokers, investment banks and fees for an information memorandum (such as those issued during an IPO to brief potential investors).

Easra agreed that issuers would only present one information memorandum to the national regulator and pay between Sh1.7 million and Sh17 million depending on the size of the offer.

It was also agreed the investment banks will need core capital of $240,000 (Sh21.8 million), a relief to Kenyan firms which are currently required by the Capital Markets Authority (CMA) to have Sh250 million in core capital.