The Capital Markets Authority (CMA) of Kenya is set to introduce securities lending and borrowing into the market before the next financial year once the relevant regulations are in place.

CMA Chief Executive Paul Muthaura said here Thursday that securities lending is vital as it will increase overall market liquidity and flexibility of financing and in return boost the capital market’s efficiency through price discovery.

The CMA had rolled out a 10-year Master Plan meant to encourage the deepening of the capital markets.

In their quest, however, the CMA said it had encountered several challenges such as the need for a stronger market infrastructure, increased diversification of financial products and services to cater to the growing needs of investors and issuers, as well as the need to improve the level of awareness among potential and existing investors regionally and internationally.

Muthaura said improved liquidity, or volume and pace of trading, in capital markets was also vital to improving the attractiveness of the market through ensuring easier entry and exit.

To this end, the Financial Services Volunteer Corps, the Securities and Exchange Commission of the United States and financial information services provider Bloomberg have partnered with the CMA and other industry stakeholders to provide technical assistance tol help increase liquidity in the capital markets.

The partnership will also help address regulatory and market-based impediments to liquidity, and advice on the development of new products and services to improve market access.

Muthaura said the CMA was in the final stages of developing securities lending and borrowing regulations and added that all stakeholders involved were putting the final touches to the relevant legislation which would allow the introduction of securities lending and borrowing before the beginning of the next financial year.