Cabinet has approved the capital markets law, paving way for the establishment of the Capital Markets Authority as an independent agency that will replace the Capital Market Advisory Council (CMAC).

According to officials from CMAC, if approved by parliament, the law will facilitate the development of orderly and efficient capital markets through effective regulation.

CMAC is the institution that is currently in charge of developing capital markets in Rwanda.

"It is an important step towards having a regulatory framework that is vital for the success of the financial markets in the country,” Olivier Kamanzi, Deputy Executive Director of CMAC told Business Times.

He added that it will make Capital Markets Authority a semi-autonomous body under the Ministry of Finance and Economic Planning.

The new law, which will replace CMAC’s current regulations embedded in the blue-print, will also pave way for the establishment of the Rwanda Stock Exchange (RSE) as the country’s principal stock exchange.

The RSE will be responsible for the daily trading of financial securities.

CMAC is also responsible for conducting trading activities through the Rwanda over the Counter Market (ROTC).

"All the existing provisions will be repealed,” Kamanzi said.
Under the new structure, the Capital Markets Authority will be responsible for the regulation while the Rwanda Stock exchange will be in charge of conducting trading.

According to CMAC officials, the Rwanda stock exchange will be licensed as a private company operating under the jurisdiction of the Capital Markets Authority which also reports to the Ministry of Finance.

In order to enhance overall development of the Rwanda stock exchange, especially attracting more companies to list shares, CMAC has also proposed fiscal incentives for listed companies.

Kamanzi said that they have proposed that withholding and corporate income taxes be slashed for listed companies.

The Rwanda OTC market was launched early last year and it has so far attracted three government Treasury bonds, one corporate bond and one cross listing from Kenya Commercial Bank (KCB).

The new developments come at a time government is set to offload shares it owns in MTN Rwanda, insurance company Sonarwa and the country’s sole brewer Bralirwa by the end of the Financial Year 2009/10.

It is also seen as a big boost towards the development of the bond market as many companies continue to express interest in issuing corporate bonds.

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