Ethiopia's capital market is entering a new phase as regulators prepare to launch a Compensation Fund to protect small and retail investors from losses due to fraud or operational mishaps. The draft regulation proposes a maximum payout of 100,000 birr for eligible retail investors. The fund will draw support from contributions by capital market service providers and the Securities Depository & Clearing Company.
Ethiopia's capital market is entering a new phase, marked by regulators' preparations to launch a Compensation Fund aimed at safeguarding small and retail investors against losses from fraud or operational errors. This initiative signals growing maturity in the nascent market, as authorities introduce key institutional safeguards.
The proposed draft regulation sets a maximum compensation limit of 100,000 birr for qualifying retail investors. Funding for the scheme will come from levies imposed on capital market service providers and the Securities Depository & Clearing Company, ensuring a structured approach to investor protection.
This development underscores efforts to bolster confidence in Ethiopia's emerging financial sector, particularly by shielding individual participants from potential risks. As the market evolves, such measures are vital for attracting broader participation and fostering stability.