Stockbroker Licensing in Kenya: CMA Requirements

A stockbroker licence from the Capital Markets Authority (CMA) is one of the core intermediary licences under Kenya’s capital markets regime, required for any firm that wants to buy and sell securities on behalf of clients on a licensed securities exchange. This article sets out what stockbroker licensing in Kenya requires under the 2025 Regulations, how the licence differs from the related dealer category, and where applicants most commonly run into trouble.

The Governing Regulations

Stockbroker licensing is governed by Part VI of the Capital Markets (Licensing Requirements) (General) Regulations, 2025 (Legal Notice 197 of 2025), published and in force from 11 December 2025. Regulation 59 revokes the earlier 2002 Regulations. Licences already in force continue until revoked, but regulation 58 gives licensed persons twelve months from commencement, that is until 11 December 2026, to meet any additional requirements the new Regulations impose.

Documentation Requirements

Under regulations 25 and 26, an application is made on Form 1 with the prescribed fee and must be accompanied by:

• a certificate of incorporation and the memorandum and articles of association;
• audited accounts for the preceding two years where applicable, and unaudited accounts for a period ending not earlier than six months before the application;
• a business plan containing the particulars in the Second Schedule;
• evidence of paid-up share capital under regulation 28(1);
• the qualifications, experience and expertise of the chief executive officer, details of the proposed premises and staff, and the proposed independent auditor;
• written confirmation from the securities exchange that the applicant meets its admission requirements and will be admitted once licensed; and
• a declaration that no director or beneficial owner holds, directly or indirectly, a beneficial interest in any other trading participant of a securities exchange.

The Regulations also provide for an approval-in-principle stage. With it, an applicant may set up operating systems and recruit staff, but may not commence operations until the licence is finally issued. An approval in principle is valid for six months, after which an applicant that has not met the requirements must apply afresh.

Capital Requirements

Regulation 28 requires a stockbroker to have paid-up share capital of at least Kshs. 50,000,000, with shareholders’ funds (paid-up capital and reserves) never falling below Kshs. 50,000,000 during the licence period. The minimum paid-up capital must remain unimpaired and may not be advanced to directors or associates. A stockbroker must also maintain liquid capital of Kshs. 30,000,000 or 8% of total liabilities, whichever is higher. These figures sit well below the investment bank threshold, reflecting the narrower scope of stockbroking.

Business Plan and Governance

The business plan should cover management structure, board composition, the company secretary, shareholding structure, the chief executive’s competencies, financial projections, the operating and IT systems, the external auditor, premises and staffing. Board composition and key personnel are also assessed under the CMA’s corporate governance rules for market intermediaries, which require a properly independent board, qualified finance and audit personnel, a risk and compliance function, and a board charter that is tailored to the business. Applicants should map their board and staffing against those rules before filing. Directors and key personnel should also be ready to provide references, CVs, fit and proper forms and police clearance certificates.

Stockbroker Versus Dealer: Why the Distinction Matters

The Capital Markets Act licenses stockbrokers and dealers as separate categories. A stockbroker acts as agent, executing client orders and earning commission without taking the other side of the trade. A dealer can act as principal, trading for its own account and taking on market risk. The 2025 Regulations also create a broker-dealer licence for firms that want to combine these activities. A firm must therefore choose carefully, since a stockbroker licence does not confer dealer rights and getting it wrong at application stage usually means a second application later.

Common Application Pitfalls

The most frequent cause of delay is the governance documentation, not the capital requirement. Applicants often submit a board that meets the numeric thresholds but fail to evidence the independence of the independent directors, or submit a boilerplate board charter. A generic statement that the firm “will implement appropriate systems” also draws follow-up queries, whereas naming the actual trading platform, order management system and client fund segregation arrangements gives the CMA something concrete to test. Directors’ CVs that do not demonstrate securities market experience are another common sticking point.

Ongoing Obligations After Licensing

Licensing is not the end of the compliance exercise. A stockbroker must maintain its capital and liquid capital thresholds continuously. Under regulation 29 it must submit monthly risk-based capital adequacy reports and management accounts to the CMA and the securities exchange within fifteen days of each month end, and audited financial statements and audited capital adequacy reports within three months of its financial year end. The governance structure described at application should match how the firm actually operates, because the CMA can inspect against those representations.

Fees

The Sixth Schedule sets, for a stockbroker, an application fee of Kshs. 10,000, a licensing fee of Kshs. 100,000 and an annual regulatory fee of Kshs. 100,000.

How This Fits the Wider CMA Framework

Stockbroking is a section 23(1) licence category, alongside dealers, investment banks, fund managers and investment advisers. A stockbroker must also be admitted as a trading participant of a licensed securities exchange, which is a separate process running alongside the CMA application. See our overview of Capital Markets Authority licensing in Kenya and our guide to investment bank licensing for comparison at the higher end of the capital scale.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.