The Central Bank of Kenya (CBK) is now seeking to unravel the identities of gold traders at the Nairobi Stock Exchange (NSE), even as the trade picks up amid Covid-19 pandemic.
The traders will now be required to provide information directly to CBK and identity of any investor buying gold stock worth more than Ksh1 million.
“In order to ensure compliance with the applicable laws, upon request from Absa Group Limited, market participants would be required to submit, directly to the Central Bank of Kenya (CBK), the required KYC (know your customer) information and supporting documentation of the respective clients who invest in the NewGold ETF in amounts exceeding $10,000 or its equivalent in any other currency carried out by the Market Participant,” said NSE chief executive Geoffrey Odundo in a circular.
The NewGold ETF which is also listed on the Johannesburg Stock Exchange (JSE) enables investors to invest in an instrument which tracks the price of Gold Bullion in real time.
The NewGold ETF was launched in 2017 at the NSE, and is the first of its king in EastAfrica, and the largestin Africa.
Other listings in Africa include Botswana, Nigeria, Mauritius, Namibia and Ghana.
During its launch, the NewGold ETF had a market capitalisation of Ksh576 million but is now worth Ksh742 million at the price of Ksh1,855 a unit.
The ETF at first experienced low demand forcing Absa (formerly Barclays) to size down from 400,000 shares to 150,000.
However, the value of gold globally increased during the Covid-19 pandemic, with investors viewing it as a safe haven during an economic slump.
Foreign investors now hold 207,500 shares as of February after Absa unlocked the other shares due to high demand. Individual local owners bought 15,000 shares while institutional owners own 26,100 shares.
Each NewGold security is equivalent to approximately 1/100th of an ounce of gold which is held in a secure depository on behalf of investors and is backed by physical gold. Its value is dependent on the fluctuations in the underlying currency price of gold bullion.