The Capital Markets Authority (CMA) has issued the first set of licenses to five coffee brokers in line with the Capital Markets (Coffee Exchange) Regulations, 2020.
The licenses will allow the brokers to carry out the role of coffee brokerage services at the Nairobi Coffee Exchange (NCE) with effect from 1 July 2021.
Meru County Coffee Marketing Agency Limited has been granted a full coffee broker licence whereas other applicants for coffee broker licence namely: Kipkelion Brokerage Company Limited, Murang’a County Coffee Dealers Company, Mt. Elgon Coffee Marketing Agency Limited and United Eastern Kenya Coffee Marketing Company Limited have been granted conditional licences.
They are expected to come into full compliance with the requirements of the Coffee Exchange Regulations within the next three months.
The Authority is mandated to regulate the spot commodity markets in Kenya and in particular, the coffee commodity market according to Section 11(3) of the Capital Markets Act.
The Coffee Exchange Regulations were gazetted by the Cabinet Secretary of the National Treasury and Planning on 3 April 2020.
The Coffee Exchange Regulations together with the Crops Coffee General Regulations, 2019 envisage that the NCE and coffee brokers are to be licensed and supervised by the CMA with effect from 1 July 2020.
However, the Coffee Exchange Regulations provided for a transitional period of one year for the NCE to come into full compliance.
Speaking on the approval, CMA Chief Executive Wyckliffe Shamiah noted, ‘The Authority is fully supportive of the reforms in the coffee subsector and is ready to execute its mandate as envisaged in the regulatory framework. As a result, these conditional licenses are our commitment to ensuring that the trading of coffee continues at the NCE without disruption even beyond the 30 June 2021 deadline.’
In order to ensure that there is no disruption in the coffee value chain, the Authority has granted an extension of 3 months to the Marketing Agents currently trading at NSE for them to apply for the coffee broker licence.
The Authority granted a provisional license to NCE on 1 July 2020 to continue operating in its existing form as it worked towards full compliance with the Coffee Exchange Regulations.
Mr. Shamiah added that the NCE’s in-principal approval has since been extended to 31 December 2021 to enable the Coffee Exchange to come into full compliance with the regulatory requirements.
NCE is expected to competitively select a commercial bank to provide the direct settlement system for clearing and settlement of coffee proceeds during this period.