ADVOKS GLOBAL · KENYA
The Capital Markets (Conduct of Business) (Market Intermediaries) Regulations
7. Clients’ understanding of risk
Edition: 2022-12-31 · In force
7. Clients’ understanding of risk
(1)A market intermediary shall not—(a)recommend a transaction to a client, or effect a transaction with or for him, unless it has taken all reasonable steps to enable the client to understand the risks involved;(b)knowingly mislead a client on any advantages or disadvantages of a contemplated transaction; or(c)promise a return unless such return is contractually guaranteed.(2)A market intermediary shall give sufficient information to the client to ensure that the client’s decisions are informed.(3)A market intermediary shall, when making recommendations to a client, take all reasonable steps to satisfy itself that the client has a full understanding of—(a)the nature of the investment;(b)the fees and charges associated with the investment;(c)the risks of the investment;(d)the factors that are likely to affect the performance of the investment;(e)the terms and conditions of the investment;(f)the consequences of departing from the terms and conditions of the investment.(4)Where a market intermediary—(a)after giving a client an explanation, in writing, is satisfied that the client understands the information required to be given under paragraph (3), the market intermediary shall retain a copy of such explanation in its records;(b)gives an explanation orally, it shall send a written note of the advice to the client, and retain a copy of the explanation in the client’s file;(c)is of the opinion that an explanation is not required, because of the client’s existing knowledge, it shall record the opinion and keep it in its records.