Market overview
How Ethiopia's capital market actually works
Before you invest, it is worth understanding who does what, who holds your securities, who matches your order, and who supervises the whole arrangement.
The chain
From your instruction to settled ownership
Five parties are involved in every trade. Knowing which one holds your assets is a reasonable thing to ask, and the answer should be the same wherever you invest.
- 1
You
The investor
You give an instruction to a licensed intermediary. You cannot place an order on the exchange directly. Nobody can.
- 2
Ethio Fidelity
Trading member & dealer
We route your order to the exchange under our best execution policy, and may quote our own price as a market maker.
- 3
ESX
The exchange
The exchange matches buyers and sellers by price and then by time, and publishes the resulting trades.
- 4
CSD
Depository & settlement
The Central Securities Depository records ownership electronically and settles the transfer of securities against cash.
- 5
ECMA
The regulator
The Authority licenses and supervises every participant in this chain, including us.
Order matching
Price, then time
The order book sorts every intention to buy or sell by price first, and among equal prices by whoever got there first. Almost everything investors find surprising about their execution follows from that.
Limit order
You set the worst price you will accept. It may not execute at all, but it will never fill at a price worse than the one you named.
Use when price matters most
Market order
Executes immediately against whatever is available. In a thin order book that can be well away from the last traded price you saw.
Use when speed matters most
Why depth matters more than the headline price
The quoted price tells you where the last trade happened. It does not tell you how much you could buy at that price. Depth: the volume resting at each level: determines what your order actually costs. This is why a dealer committing capital to both sides of the book improves outcomes for everyone trading in that security.
Existing shareholders
Already hold paper share certificates?
Shares issued before the exchange launched exist on paper or in a company register rather than in electronic form. Before they can be traded on the ESX they must be dematerialised: converted into an electronic record held at the Central Securities Depository.
Dematerialisation is carried out by the issuing company, not by us. The company works with the relevant authorities to move its register into recognised electronic form. Two conditions therefore have to be met before you can sell such a holding on the exchange: the issuing company must be listed on the ESX, and your specific holding must have been dematerialised.
Once both are true, you can open a brokerage account with us, have the electronic shares credited to your CSD account, and trade them.
Not sure where your shares stand?
Start with the company that issued them. They can tell you whether their register has been dematerialised. We are happy to explain the process and what it means for you.
Ask our teamWho's who
The institutions involved
Regulator
Ethiopian Capital Market Authority
Exchange
Ethiopian Securities Exchange
Settlement & custody
Central Securities Depository
Settlement bank