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The Capital Markets Authority (CMA) has issued a stern warning to market participants at the Nairobi Coffee Exchange (NCE) for alleged violations of trading rules.

In response, the regulator has outlined regulations aimed at ensuring the trading of clean coffee beans adheres to best practices and integrity standards.

In a circular dated March 28, 2024, addressed to coffee brokers and the NCE, CMA Chief Executive Officer Wyckliffe Shamiah highlighted concerns raised by industry stakeholders regarding sample delivery, auction data, withdrawal of lots, bid confirmation, invoicing, warrants, prompt dates, and payment procedures.

Exchange regulations

“To this end we have noted concerns raised by various stakeholders in the coffee sector mostly relating to market conduct and strict adherence to the Capital Market (Coffee Exchange) Regulations, 2020 and the NCE trading rules,” said Shamiah.

The regulator warned that any manipulation or malpractice interfering with the trading of clean beans would not be tolerated.

He outlined specific requirements, stating that catalogues must be uploaded and approved on the Direct Settlement System (DSS) one working day before the sale date, with invoicing to be completed within one working day after the sale date.

Last week, the Kenya Coffee Producers Association (KCPA) voiced grievances about challenges faced in trading coffee.

KCPA chair Peter Gikonyo cited delays in remitting proceeds to farmers and alleged introduction of “new levies” without farmers’ consent.

Additionally, there were complaints about delays in remitting fees accrued from the presentation of coffee.

Shamiah stressed the importance of adherence to integrity standards and fair dealing with coffee growers.

He referenced the NCE Rules 2023, emphasizing the need for professional operation of trading processes to maintain confidence among value chain players.

The authority wants draft catalogues sent by coffee brokers to the exchange to be received on or before a Wednesday or 13 working days before the sale date. But the final catalogue has to be submitted to the exchange and uploaded to DSS within three working days prior to the sale date.