Kenya’s online forex trading market has grown fast, and so has the regulatory framework around it. Any firm offering online foreign exchange brokerage services to Kenyan clients without the correct licence from the Capital Markets Authority (CMA) is operating illegally, regardless of where the firm is incorporated. This article sets out what a non-dealing online forex broker licence requires, who needs one, and the capital thresholds the CMA actually enforces.

What Is a Non-Dealing Online Forex Broker?

The Capital Markets (Online Foreign Exchange Trading) Regulations, 2017 create three distinct licence categories: dealing online foreign exchange broker, non-dealing online foreign exchange broker, and money manager. A non-dealing broker links a client to the online forex market and earns its revenue from commission or spread mark-up, without taking the other side of client trades. This distinguishes it from a dealing broker, which can act as market maker, and from a money manager, which trades on behalf of clients under a separate mandate. Each category has its own capital and governance requirements, and a firm cannot rely on one licence to conduct the activities of another. In practice, most offshore platforms seeking to serve Kenyan retail clients through a locally incorporated entity fall into the non-dealing category, since they typically route execution through a third-party liquidity provider rather than dealing as principal.

Capital Requirements

The capital thresholds are set out directly in the Capital Markets (Online Foreign Exchange Trading) Regulations, 2017 (Legal Notice 226 of 2017), and are confirmed in the CMA’s own compliance checklist for online forex brokers:

• Minimum paid-up share capital of Kshs. 30,000,000 for a non-dealing licence (the threshold for a dealing licence is Kshs. 50,000,000).
• Liquid capital maintained at all times at the higher of Kshs. 30,000,000 or 8% of total liabilities.
• Where the applicant already operates in another jurisdiction, an undertaking to allocate and keep segregated in Kenya an amount not less than the required minimum capital.

Applicants should note that some secondary sources online quote different figures, including some as low as Kshs. 5,000,000. These are incorrect for the non-dealing broker category and should not be relied on. The regulation text and the CMA checklist are the only reliable references, and both firms and their advisers should confirm figures against them before submitting an application or budgeting for one.

Documentation and Governance Requirements

Beyond capital, the CMA’s checklist under Section 29 of the Capital Markets Act, Part IV of the Capital Markets (Licensing Requirements) (General) Regulations, 2002, and the Capital Markets (Corporate Governance) (Market Intermediaries) Regulations, 2011 requires a substantial documentation package, including:

• A duly completed Form 1 application, certified certificate of incorporation, and memorandum and articles of association with objects permitting the forex brokerage business.
• Six months of unaudited accounts plus two years of audited accounts, or an auditor’s certificate for a newly established entity.
• A business plan covering management structure, board composition, shareholding structure, and financial projections for three years.
• A Chief Executive who is fit and proper under section 24A of the Capital Markets Act, with at least five years’ experience in forex, forex futures, or futures contracts, and membership of a recognised professional body.
• An accredited compliance officer holding a Chartered Institute of Securities and Investments (CISI) qualification, who may also serve as the anti-money laundering reporting officer.
• Client-facing personnel who have completed Modules One and Two of the CISI Securities Industry Certification Programme.
• Two letters of business reference, one bank reference, comprehensive CVs, police clearance certificates, and Fit and Proper forms for directors and key personnel.

Board Composition Rules

The corporate governance regulations impose specific board structure requirements that catch many first-time applicants off guard. The board must have a minimum of three directors, at least a third of whom are natural persons and at least a third of whom are independent and non-executive. No more than a third of directors may be close relations of one another, a director may not hold more than two directorships in market intermediaries unless they are subsidiaries or holding companies of each other, and the board chairman must be independent and non-executive, distinct from the chief executive. An audit committee of at least three independent, non-executive directors must also be established and must report directly to the board.

Application Fee and Process

The application fee is Kshs. 2,500 under the Second Schedule to the Regulations as currently in force (revised following the 2023 amendment). Some CMA checklists still in circulation show an older Kshs. 10,000 figure; the Second Schedule as currently in force is the applicable one. The annual licence fee once granted is Kshs. 100,000 for a non-dealing broker. Beyond the fee, the real cost of an application is in assembling the documentation package correctly the first time. Applications with incomplete governance documentation, unclear shareholding structures, or CVs that do not demonstrate the required five years of forex-specific experience for the Chief Executive are the most common cause of delay. Firms already regulated in another jurisdiction have an additional layer of requirements, including a letter from the home regulator confirming good standing and no objection to Kenyan operations, and a letter from any online trading platform confirming it will admit the applicant once licensed.

Ongoing Obligations After Licensing

A non-dealing broker licence is not a one-time approval. Regulation 15 imposes monthly continuing obligations: within fifteen days of each month end, brokers must submit certified details of customer complaints and their resolution status, evidence of daily reconciliations, full monthly management accounts, and risk-based capital adequacy returns.The Authority can suspend a licence under regulation 10 on any of fourteen grounds, including failure to comply with licence conditions or CMA directives, failure to submit required returns, furnishing false information, non-cooperation with an inspection, engaging in price manipulation or insider trading, financial deterioration that puts investors at risk, non-payment of fees, or failing to utilise the licence within a year of grant or ceasing business for more than thirty days without CMA approval.Revocation under regulation 11 is narrower and more serious: it applies where suspension grounds continue unresolved, or where the broker has engaged in insider trading, market manipulation, or unfair practice, has been convicted of a criminal offence or found guilty of fraud, has failed to comply with a CMA directive, or where revocation is necessary to protect investors.Automatic revocation under regulation 12 is narrower still and applies only where the broker is declared insolvent by a court, voluntarily surrenders the licence, or is wound up by court order. It does not apply for simply failing to use the licence promptly; that is a suspension ground, not an automatic revocation ground.

Why This Matters Beyond the Licence Itself

The CMA has been active in enforcement against unlicensed online forex activity, including public cautionary notices naming offshore firms advertising to Kenyan clients without a licence. For a genuine market entrant, the licence is not simply a compliance formality. It determines whether client funds can lawfully be held, whether marketing activity is lawful, and whether directors and key personnel face personal exposure under section 23 of the Capital Markets Act for conducting an unlicensed forex business.

For context on how the non-dealing broker licence fits within the CMA’s broader licensing regime, including securities dealers, fund managers, and investment advisers, see our overview of Capital Markets Authority licensing in Kenya. Firms operating across the wider regulated financial sector may also find it useful to review our financial services industry practice.

How We Can Help

Clay & Associates Advocates advises applicants and existing licensees on CMA forex broker licensing, from structuring the initial application through to ongoing corporate governance and AML compliance obligations. We work directly from the regulation text and the CMA’s own checklists rather than secondary summaries, which matters given how often the specific capital and governance figures are misquoted elsewhere online. If you are considering an application, or need a compliance health check on an existing non-dealing broker licence, contact our regulatory and compliance team.

Sources: Capital Markets (Online Foreign Exchange Trading) Regulations, 2017 (Legal Notice 226 of 2017), available via Kenya Law; Capital Markets Authority, Online Forex Brokers compliance checklist.

Client Disclosure Obligations Under CMA Circular 03/2023

Beyond the licensing checklist, the CMA issued Circular No. 03/2023 on 21 September 2023, under sections 11(1)(d) and 11(3)(d) of the Capital Markets Act, imposing specific and ongoing disclosure obligations on all dealing and non-dealing online forex brokers. These are not one-time licensing requirements; they are continuous obligations that apply for as long as the broker holds a licence.

Every broker must calculate its individual client loss ratio, the percentage of retail clients who lost money trading CFDs, every three months, covering the trailing twelve-month period, and submit this to the CMA by the 15th of the month following each review period, that is 15 January, April, July, and October. The circular sets out the exact calculation methodology, including which accounts and profit or loss figures to include and exclude.

Every marketing communication, advertisement, or published information relating to Online Forex/CFDs must carry a prescribed risk warning, in a format that varies depending on the medium. For durable media such as paper or email, and for webpages, the warning must state the provider’s actual client loss percentage. For non-durable media, or where character limits prevent the full warning, an abbreviated or standard warning applies instead, typically the range stating that between 75 and 95 per cent of retail investor accounts lose money trading Online Forex/CFDs. A broker with no open CFD positions connected to a retail account in the last twelve-month period uses the standard warning rather than a provider-specific figure. New categories of CFD products cannot be rolled out without CMA no-objection first. Brokers must also provide, and prominently disclose, margin stop-out protection and negative balance protection, the latter capping a client’s total liability at the funds actually held in their trading account.