Ethiopian Securities Exchange sets rules for cancellations and block trades

The Ethiopian Securities Exchange has issued a Main Market Trading Manual setting procedures for trade cancellations, settlement problems and large off-market transactions as the country’s capital market moves toward full operation.

Under the manual, trades executed through the Automated Trading System may be cancelled when technical failures in the Central Securities Depository or related networks prevent settlement messages from being delivered. Settlement messages may be resent after the problem is verified as resolved, while a cancellation would restore investors’ holdings to their pre-trade positions.

The exchange may also use a negotiated-trade portal to complete affected transactions after normal operations resume.

A block trade must be a single, unaggregated transaction worth at least five percent of an issuer’s total market capitalization. Such trades require prior exchange approval, must be negotiated outside the central order book and are subject to reporting requirements. For liquid securities, their price must remain within 30 percent above or below the 30-day volume-weighted average price.

The manual schedules system and data checks from 8:00 a.m., a pre-open auction from 9:00 to 9:30 a.m., continuous trading until 3:00 p.m., and administrative reporting through 5:00 p.m. The minimum central-order-book size is one security and the general floor price is one birr.

The exchange said thresholds may be adjusted as liquidity and trading patterns develop. The rules provide trading members with operational guidance under the oversight of the Ethiopian Capital Market Authority.