Licensing
Any firm that wants to operate as a broker, dealer, investment bank, or market maker in Ethiopia’s capital market needs two things: a license from the Ethiopian Capital Market Authority (ECMA), and admission as a Trading Member of ESX.
Who Needs a License
- Securities brokers
- Securities dealers
- Investment banks
- Market makers
- Digital sub-brokers
Required Documents
For a business organization (share company, private limited company, partnership, etc.), the application must include:
- Evidence of fee payment
- Certificate of commercial registration or investment permit
- Incorporation documents (Memorandum and Articles of Association) showing shareholders, directors, and capital
- Where a shareholder is itself a business organization, that entity’s incorporation documents too
- Board resolution approving the decision to seek the license
- List of individuals or entities with significant influence over the company
- A business plan (corporate profile, strategy, objectives, board charter, registered office address, organogram)
- An undertaking to comply with the Code of Conduct
- Audited financial statements (if operating 12+ months) or an audited statement of affairs (if newer)
- Personnel details, including proposed Appointed Representatives, meeting fit-and-proper criteria
- Evidence of meeting minimum capital requirements
- Sample client account-opening forms meeting KYC requirements
- Tax Clearance Certificate, TIN Certificate, and VAT Registration Certificate
Individuals (excluding Appointed Representatives) face a lighter but similar list: fee payment, sole trader registration, valid ID confirming the applicant is 18+, CV and qualifications, a compliance undertaking, evidence of meeting net worth requirements, sample KYC forms, and a business plan.
An applicant already licensed by the National Bank of Ethiopia can skip several requirements by submitting an NBE no-objection letter instead, relevant to bank-affiliated capital arms such as Wegagen Capital and CBE Capital.
Fees
Three separate non-refundable payments apply: an application fee (paid at filing), a licensing fee (paid on approval), and an Appointed Representative licensing fee for each proposed representative (paid before the pre-certification inspection).
| License Type | Application Fee (ETB) | Licensing Fee (ETB) | Annual Renewal (ETB) |
|---|---|---|---|
| Investment Bank (Within a Banking Group) | 60,000 | 1,000,000 | 500,000 |
| Investment Bank (Not Part of a Banking Group) | 60,000 | 540,000 | 270,000 |
| Securities Broker | 60,000 | 132,000 | 66,000 |
| Securities Dealer | 60,000 | 240,000 | 120,000 |
| Securities Digital Sub-Broker | 60,000 | 132,000 | 66,000 |
| Securities Custodian | 60,000 | 1,000,000 | 500,000 |
| Appointed Representative | 5,000 | 10,000 | 5,000 |
Notable: an investment bank operating within a banking group pays far more (ETB 1,000,000 licensing fee, ETB 500,000 annual renewal) than one operating independently (ETB 540,000 and ETB 270,000) — a meaningful cost signal in how a commercial bank structures its capital markets arm.
Pre-Certification Inspection
Before ECMA inspects the applicant’s offices, the applicant must also provide a dispute resolution procedure, a no-objection from the relevant Self-Regulatory Organization (where applicable), evidence that proposed Appointed Representatives passed ECMA’s licensing exam and interview, a Police Clearance Certificate for each director, representative, and employee, proof of Compensation Fund contribution, and a fidelity guarantee of at least 20% of shareholders’ fund (or net worth, for individuals). NBE-licensed applicants receive a partial exemption here as well.
Processing Timeline
- Within 15 business days of a complete application (or of proposed Appointed Representatives passing their licensing exam/interview, whichever is later), ECMA communicates a pre-certification inspection date.
- The inspection itself must happen within 10 business days of that notice.
- The applicant may request to reschedule the inspection within 5 business days of receiving the notice.
- The timeline resets if ECMA flags a deficiency or requests more information.
- An application can be terminated if the applicant goes 60 consecutive calendar days without progressing it.
Investment Bank–Specific Rules
- Eligibility: share company or private limited company only, with valid commercial registration or investment permit
- If the bank intends to act as a broker (execute trades), it must additionally obtain an Approval-in-Principle for trading membership from ESX before the pre-certification inspection
- Authorized activities: broker/dealer/adviser services, underwriting securities issuances, acting as intermediary between issuers and investors, facilitating mergers and corporate reorganizations
- Appointed Representatives: at minimum a Trader (if acting as broker), plus at least one representative skilled specifically in corporate finance
- Investment banks are explicitly non-deposit-taking institutions
Securities Broker/Dealer–Specific Rules
- Same eligibility bar: share company or private limited company with valid registration
- Must show an Approval-in-Principle for ESX trading membership before pre-certification inspection
- Must appoint a licensed Trader as an Appointed Representative
- Digital Sub-Brokers operate only through a sponsoring broker/dealer and are barred from ever holding client funds directly
Source: Capital Market Service Providers Licensing and Supervision Directive No. 980/2024, ECMA (ecma.gov.et/cmsp), Articles 6–11 and 38–51, and ECMA Fee Directive No. 996/2024.