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In a groundbreaking move to bring clarity and structure to its capital market, the Ethiopian Capital Market Authority (ECMA) is introducing a new fee directive that will impact all capital market transactions within its jurisdiction. The directive, scheduled for implementation in 2023, is a detailed framework outlining the application, licensing, and transaction fees for various market entities.
At its core, the directive establishes fees for services like security registrations and license applications, with a keen eye on aligning with international standards to attract global participants. For instance, Securities Exchange, Over the Counter trading platforms, and Central Securities Depositories will see licensing fees set at $36,000, with an annual license renewal fee pegged at 1% of gross revenue.
The draft also lays out transaction fees for different financial products. For securities exchange and Over the Counter trading facility transactions, fees are finely calibrated, with treasury bills, interbank, REPOs, debt securities, and commercial paper transactions incurring a fee of 0.0105% of the transaction value. Shares are set at a higher rate of 0.20%, reflecting their unique market dynamics.
Collective Investment Schemes and Alternative Investment Schemes registration come with an application fee of $4,500 and a 0.025% fee on the total value of the securities offering. This nuanced approach extends to the registration of municipal debt securities, which are exempt from application fees but subject to a registration fee of 0.1% of the total value of the securities offering.
The directive further specifies that while fees are set in USD, payment is to be made in Ethiopian Birr, using the daily exchange rate issued by the National Bank of Ethiopia. This policy ensures that all market participants, regardless of their geographical location, face the same costs and are not disadvantaged by currency fluctuations.
The ECMA’s fee directive is more than a set of financial guidelines; it’s a strategic move to bolster the country’s economic growth by providing a transparent, competitive, and non-discriminatory fee structure. It marks a significant step towards enhancing the appeal of Ethiopia’s capital market to both local and international investors and could herald a new era of financial inclusivity and sophistication in one of Africa’s most promising markets.
