The Capital Markets Authority’s Investor Compensation Fund (ICF) expanded by Sh1 billion to reach Sh6.84 billion in the year ended June 2025, buoyed by stronger earnings from government securities and increased transaction fees from trading at the Nairobi Securities Exchange (NSE).
According to the CMA’s 2024/25 annual report, income from investments in Treasury bills and bonds rose 25 percent to Sh845.96 million, making it the fund’s largest source of revenue during the period. Transaction fee collections from NSE trades also increased significantly, climbing to Sh195.2 million from Sh104.6 million a year earlier.
The fund further received Sh19 million from regulatory penalties imposed on licensed market players and recorded a Sh31.6 million gain from its equity investments at the NSE.
Most of the additional income was channelled into government securities, with Treasury bill holdings nearly doubling from Sh1.12 billion to Sh2.17 billion. Investments in Treasury bonds edged up to Sh4.61 billion from Sh4.59 billion, while the value of listed equities increased from Sh51.3 million to Sh78.9 million.
Established in 1995, the ICF compensates investors for losses of up to Sh200,000 if a licensed stockbroker fails. It is financed through investment income, regulatory fines, interest earned on public issue subscription funds awaiting refunds, and levies on NSE trades, including 0.01 percent on equity transactions and 0.004 percent on bond trades.
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The fund has grown more than fivefold over the past decade, rising from Sh1.3 billion in 2015, largely because there have been no recent broker failures requiring compensation. It was previously used to reimburse investors affected by the collapses of Nyaga Stockbrokers in 2008 and Discount Securities in 2009. Investors affected by the earlier collapse of Francis Thuo and Partners were compensated separately after the CMA sold the firm’s trading licence.
Compensation for the Nyaga and Discount cases was initially capped at Sh50,000 per investor, prompting criticism from affected clients and leading regulators to raise the limit to the current Sh200,000.
The CMA has indicated it is exploring ways to broaden the fund’s coverage as Kenya’s capital markets evolve with products such as derivatives. Meanwhile, investor wealth at the NSE has doubled over the past decade to a record Sh3.8 trillion, driven by new listings and stronger company valuations.
