ADVOKS GLOBAL · KENYA
The Capital Markets (Collective Investments Schemes) Regulations, 2023
105. Securities lending and derivatives
Edition: 2023-12-15 · In force
105. Securities lending and derivatives
(1)Except as provided under the Capital Markets (Securities Lending and Borrowing and Short Selling) Regulations, 2017 (L.N. 295/2017), the assets of the scheme may not be lent or used as collateral to cover any transaction.(2)The assets of the scheme may include derivative instruments to the extent that they are required for hedging purposes only.(3)For a collective investment scheme to be able to engage in securities lending and to enable prospective holders of participatory interests to make informed decisions, its incorporation documents shall disclose—(a)its intention to lend the securities belonging to the collective investment scheme;(b)its investment policy with regard to securities lending; and(c)the market risks associated with securities lending transactions such as loss, insolvency etc.(4)The fund manager of a collective investment scheme may engage in a securities lending transaction as a lender on behalf of the collective investment scheme, if the securities lending transaction is in compliance with the key investor information document statement of the collective investment scheme and the liquidity requirements of the collective investment scheme.(5)The securities lending transaction must be undertaken in a safe and prudent manner and in accordance with the lending policies and procedures that are approved by the fund manager, trustee or board of directors of the collective investment scheme to provide additional income or fees for the benefit of the collective investment scheme.(6)The fund manager of the collective investment scheme must ensure that controls and procedures relating to such securities lending transactions are comprehensive and sound.