The Ethiopian Capital Market Authority (ECMA) announced a directive that will establish Ethiopia's first licensed securities exchange.

The ECMA, established in 2021, holds the authority to regulate the capital market through directives. The newly issued "Directive on Licensing, Operation, and Supervision of Securities Exchanges, Derivatives Exchanges, and the Over-The-Counter Market No. 1009/2024" outlines the framework for licensing and operating both exchange and over-the-counter markets.

This directive represents a significant departure from the previously fragmented securities trading landscape in Ethiopia. For the first time, both government and private entities can leverage a secure and regulated market to raise capital by selling shares and bonds. This opens doors for businesses seeking funding for growth and expansion. Additionally, licensed service providers gain access to a transparent trading system for buying and selling securities.

Previously, the lack of a central structure in securities trading posed challenges for transparency and control. This new directive addresses this concern by establishing a framework for a licensed market with authorized traders. This, in turn, is expected to ensure necessary controls and transparency throughout the buying and selling process, fostering trust among investors.

The directive paves the way for the Ethiopian Securities Exchange S.C. to officially begin operations. This exchange will function as a central hub for licensed trading activity, attracting both domestic and international investors.

Source: Fana BC and Sheger FM 102.1