Why a regulated forex trading platform will uplift Kenya’s economy


In this era of social networking and powerful technologies, you can make money in more ways than one. In fact, you can create streams of income in a matter of minutes provided you choose a suitable investment vehicle. Try to picture buying stocks at low prices and then selling them once they hit a high. You can as well engage manufacturers directly and spend your cash on buying in bulk fast moving items like cooking oil, soaps, or hankies to supply to small retailers at promotional costs. Well, it is increasingly evident that many of us want to invest in lucrative ventures, but fail to find one.

With the potential of forex trading as a lucrative investment opportunity, one smart company has jumped in to tap the virgin market. Forex, where currencies are traded in pairs, is one of those not so costly investments that you can use to your advantage. Here a trader can bet on, say, a dollar against the euro, or sterling pound against the Japanese yen. Basically, in foreign exchange market, it’s not only about speed but also the movement of currencies.

There has been a lot of online transactions with very little regulations. It has all been about offshore platforms not backed by the Kenyan regulations. But now, for the first time, local traders will have the opportunity to participate in global forex markets in a strictly locally regulated environment and at lower transaction costs thanks to Kenya’s Central Markets Authority that has given online forex broker, EGM Securities, a green light.

According to Kevin Ng’ang’a, CEO of EGM Securities, increased access to global forex markets and innovative financial offerings for Kenya’s investment community is a major leap forward for the country to advancing its financial markets depth and economic growth. Although forex trading is more lucrative than buying and selling shares, it is better to be smart than lucky by simply investing money that you can afford to lose.

“We want to give ease of access in a transparent and professional manner,” Ng’ang’a said. “We realised there was an opportunity as many Kenyans were trading with foreign entities, which are not regulated by Kenya’s Capital Markets Authority, and do not provide investor protection as these are offshore entities. Being licensed by the Capital Markets Authority of Kenya (CMA), investors are afforded the provision of legitimate online Forex services.”

Excited at the prospect that lies ahead for the financial markets in Kenya, Mr Ng’ang’a pointed out that the forex market, with daily volumes estimated at $5.3 trillion, is the largest financial market in the world. There is some background to his enthusiasm in technology driven products: he has abroad experience including asset liability management, fixed income, cash management, correspondent banking, consumer business, risk management and structured product segments. And he was a member of the Kenya Bankers’ Association Financial Markets Sub Committee, the umbrella body of Kenya Banks.

Taking his experiences to great heights, the chief executive who is also a senior treasury and financial and risk management C-suite executive with over 16 years exposure to international money markets, Mr Ng’ang’a believes that their offering will provide an opportunity for the country to grow its forex reserves as traders who had invested offshore have the opportunity to bring back funds and trade in a locally regulated environment.

Ng’ang’a is behind a securities firm that will not only allow traders to use multiple payment channels including mobile payment channels like M-Pesa but also offer lower transaction costs as well as options for micro slots, which means you can invest even below the minimum amount that’s required. He said that the minimum amount a person needs in order to start trading is about Sh10, 000 ($100) but with micro slots, a trader is able to adjust. You only need strong Internet connection to turn in good money by trading foreign currency online.

Being the first to move into the forex space, experts worry that it will take a long time for people especially those who are at the bottom of the pyramid to understand how all these forex things work. He said that education is one thing that they must invest in. Relief may also be on the way especially going by the fact that Kenya is the first country on the African continent where an innovative offering that’s backed by government (CMA) has been launched.

Mr Aly-Khan Satchu, Kenya’s foremost financial professional and one of the most influential investors at the Nairobi Stock Exchange said that the move is a vote of confidence for Kenya’s financial and capital markets and regulatory environment.

“There’s a lot to it… like training people, and move towards IT. But I think the opportunity is very enormous. The architecture is being built. We have big corporates and also people in the streets with big appetite for online forex trading. Already, there are people who are accessing this market. These traders invest as low as Sh50, 000.”

L-R; Mr. Mwangi Karume, board member, EGM Securities, David Nyaga – director, EGM Securities, Kevin Ng’ang’a – CEO, EGM Securities, Paul Muthaura – CE, Capital Markets Authority

With the number of people who are interested in online forex swelling by the day, this innovative financial offering boosts Kenya’s positioning as a leader in financial innovation, and plays a critical role in providing the market with exposure to global macro opportunities such as foreign exchange, oil, gold and other precious metals and commodities.

Private investors will benefit from broader, more liquid diversified investment portfolio offerings that include forex and Contracts for Differences (CFDs), in addition to the more traditional asset classes of cash, equities and property. Corporate and Institutional investors will benefit from a Partnership Programme.

For now, those (individual investors) who lack the much-needed experience in forex trading can learn the ropes thanks to a demo. Once you visit EGM online portal and sign up, you’ll get some free credit to start with as you learn the actual trading. It is something that should not be rushed, experts say.

Kenya was the obvious entry point into the region to introduce online forex trading as it is globally renowned as the leading financial innovation hub in Africa

Early this year, EGM Securities became the first and only non-dealing online forex broker in Kenya to receive a license by the government capital markets regulator, the Central Markets Authority of Kenya, after a very stringent and lengthy application process. The company has since established a fully resourced staff complement of qualified and experienced professionals across various disciplines including compliance, finance, operations, IT in Nairobi.

Coming at a time when there are a lot of online transactions with very little regulation, the entry of EGM Securities will create new opportunities as far as online currency trading is concerned – it is still being viewed as a scam by some quarters. Although the road is bumpy ahead (in terms of educating the masses), more and more trading companies are expected to look online to cushion their growth.

Ng’ang’a said: “Kenya was the obvious point of entry into the region to introduce online forex trading using mobile payment channels given that the country is the most advanced economy in Central and East Africa, and it is globally renowned as the leading financial innovation hub in Africa, supported by its strong entrepreneurial culture, and importantly, Kenya has the most proactive and innovative regulator in the region.” 

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