A draft regulation tabled by the Ethiopian Capital Market Authority seeks to bar a number of stakeholders from accessing remedial monetary benefits from the Capital Market Compensation Fund, which is pending approval from the Prime Minister.
The fund is designed to pay out compensations for defaults that might happen during capital market transactions, covering for a failure to make payment on the side of a capital market service provider, transaction payment investigator, depositor, or investor
Its initial capital, which will be injected by the federal government, has yet to be determined.
Nonetheless, the draft’s authors argue that banks, insurers, saving and credit unions, MFIs, collective investment funds, pensions funds, capital market service providers, and capable local and foreign investors, among others, should be excluded from the list of the fund’s potential beneficiaries.
From The Reporter Magazine
The federal government and regional administrations, as well as local governments under them and their affiliates, will also be ineligible to receive compensation from the fund, according to the draft. Foreign governments and their affiliates are also excluded.
Auditors, and insiders and stakeholders who are close to capital market service providers and compensation service systems are also not eligible.
The Authority is set to introduce further directives to determine compensation rates and administrative guidelines.
From The Reporter Magazine
All licensed capital market service providers and related firms will be required to contribute a certain amount of money to the fund, but the value has yet to be determined. The draft details that whenever the fund’s capital falls below a minimum threshold, the government will act by injecting recovery capital, or the Authority will move to collect additional resources from the capital market service providers.
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