Thursday, February 29, 2024
BusinessEthiopia nears completion of securities depository system procurement with US company

Ethiopia nears completion of securities depository system procurement with US company

Procurement process of the Central Securities Depository (CSD) system for Ethiopia’s upcoming stock exchange is reaching its final stage, with Montran, a New York-based financial technology company, poised to secure the contract.

Several sources close to the matter disclosed that Montran was selected to provide the service after officials from the National Bank of Ethiopia (NBE), the Ministry of Finance, and the financing body -Financial Sector Deepening (FSD Africa) expressed their interest last year.

The system is a crucial infrastructure to operationalize the stock exchange. Currently undergoing operationalization and onboarding processes by the NBE, the system is expected to commence full operations after the contract is officially signed.

Representatives from the central bank and the Ethiopian Capital Markets Authority (ECMA), speaking on the condition of anonymity, informed The Reporter that the government, through the ECMA and NBE, will sign the contract with the company.

According to the bidding document shared by FSD Africa in July 2022, NBE will initially use the CSD system for government-issued securities. Later, the system will be expanded to include corporate debt securities and equities.

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“Government securities will be controlled by the NBE, and private securities by the Capital Market Authority,” a source at the ECMA told The Reporter.

However, NBE will host the system due to its robust information technology infrastructure and data center.

“Instead of procuring two different systems, the resource should be mobilized and put in one place at the NBE,” the source said.

The contract with Montran is yet to be signed, and NBE, leading the procurement process, will receive financial support from FSD Africa to pay the company. This assistance aims to facilitate the establishment of Ethiopia’s inaugural stock exchange.

The estimated total cost of system procurement is around USD one million.

Back in July 2023, an official from FSD Africa informed The Reporter that FSD had already agreed to purchase the system but refrained from disclosing the company’s name.

“The NBE is in charge of making the official announcement regarding the selected company and the progress,” said the source.

A high-ranking official at the NBE confirmed to The Reporter that the system developed by Montran will be hosted at their office, and the contract signing will be announced by NBE colleagues in the near future.

Ed Note: We first reported this story writing that the system under procurement is a securities trading system. But, it’s a securities depository system called Central Securities Depository (CSD).

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Video from Enat Bank Youtube Channel.

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