By Kenya’s Capital Markets Authority (CMA) has approved FourFront Management Ltd, a unit of Standard Investment Bank (SIB), to live-test a short selling platform on the Nairobi Securities Exchange (NSE), the company said, in a six-month pilot that began on August 1, 2026.
The platform, built for securities lending and borrowing (SLB), was developed by FourFront in partnership with the Central Depository and Settlement Corporation (CDSC), Kenya’s share registry and settlement body.
It allows investors to borrow shares and sell them in anticipation of a price fall, then buy them back later at a lower price to return to the lender.
CMA Chief Executive Wycliffe Shamiah confirmed the admission in a letter dated July 31 to Donald Wangunyu, FourFront’s chief executive, saying the regulator had “considered the application” and was admitting the firm “to test the innovation” under its regulatory sandbox framework.
Wangunyu, who is also an executive director at Standard Investment Bank, said the platform marked a shift in how Kenyan equities are traded. “We’re helping build a new way to trade the Kenyan stock market, including the ability to profit when share prices fall,” he said in a statement.
Short selling has been available in principle on the NSE since CDSC launched an initial securities lending and borrowing platform in 2020, but uptake has been low. Regulators have attributed the weak participation to strict collateral requirements, limited investor understanding of the mechanism and thin engagement from custodian agents who hold client shares.
Kenyan authorities are now reworking the underlying rules alongside the FourFront pilot. Under current regulations, dealers lending shares must hold collateral equivalent to 110% of the shares’ value, a threshold market participants say has discouraged trading.
The CMA and CDSC are drafting amendments to move the SLB market toward a “bilateral” model, in which lenders and borrowers negotiate collateral terms directly, rather than being matched anonymously through an automated screen-based system.
“Our framework provides for both on-screen and bilateral SLB,” Shamiah told The EastAfrican, adding that the CMA was in talks with CDSC on implementation.
CDSC Chief Executive Jesse Kagoma has said a joint technical team from the CMA and CDSC is finalizing amendments to the existing rules to enable the bilateral approach, which he said would help address collateral-related barriers that have deterred investors.
FourFront will also be able to draw on shares held in long-term pension portfolios during the pilot, after Kenya’s Retirement Benefits Authority gave a no-objection allowing pension schemes to participate in securities lending, according to The EastAfrican.
The push to revive short selling comes as the NSE grapples with a large pool of dormant shareholder accounts. CDSC data cited by The EastAfrican showed the number of inactive share accounts – those without a transaction for 24 consecutive months – rose 28% to 1.54 million between 2022 and 2024.
Industry figures have offered mixed views on the timing. Willie Njoroge, president of the Africa Stockbrokers and Securities Dealers Association and chief executive of the Kenya Association of Stockbrokers and Investment Banks, said low activity in securities lending reflected market cycles rather than a flaw in the product, noting that few investors seek to short a rising market during a sustained rally.
Celestin Rwabukumba, chief executive of the Rwanda Stock Exchange, said securities lending and borrowing could support liquidity across East African markets but cautioned that regional bourses, including Rwanda’s, lack enough actively traded listed companies for the tool to gain significant traction quickly.
FourFront Management, a subsidiary of Standard Investment Bank, was first admitted to the CMA’s regulatory sandbox in 2020 to test a robo-advisory service. Wangunyu has been credited by industry bodies with introducing algorithmic and high-frequency trading tools to the Kenyan market.
The CMA’s regulatory sandbox, launched to allow controlled live testing of financial innovations, has admitted several firms since 2018, spanning robo-advisory, crowdfunding and securities lending products.
FourFront’s short selling pilot is scheduled to run through late January 2027, after which the CMA will assess whether to grant full approval for the platform to operate commercially on the NSE.
