Trading & Operations
Trading & Operations
Trading Market Structure
Trading on the ESX shall be only on approved securities on ESX’s trading platform unless the Exchange grants an express exemption in line with its trading rules.
Trading System
All trading activity on ESX listed securities occurs via ESX’s Automated Trading System (ATS). ESX adopts a hybrid market that provides both a central limit order book as well as platforms for bilateral and multilateral negotiated trading in the form of Requests for Quotes (RFQs). ESX’s central limit order book allows trading members and their clients to enter buy and sell orders anonymously where customer trades are executed using ESX’s modern trading engine based on a transparent price-time priority mechanism of trade matching. The ATS seamlessly integrates with the CSD that ensures efficient clearing and settlement.
Trading Operations
- Market Opening: Trading on ESX begins with an opening auction. During this phase, buy and sell orders are matched, and the opening price for each security is determined.
- Order Placement: Investors places buy and sell orders with their brokerage firms or directly via direct market access facilities. Among others, orders can be market orders (executed at the prevailing market price) or limit orders (executed only at a specified price or better).
- Order Matching: ESX uses electronic trading systems to match buy and sell orders. Orders are executed based on a price-time priority, meaning the first order at a specific price gets priority.
- Continuous Trading: Once the market opens, continuous trading takes place, with buy and sell orders executed throughout the trading day. Prices fluctuate based on supply and demand.
- Market Surveillance: ESX utilizes various surveillance mechanisms to monitor trading activity and detect unusual or suspicious behavior. This helps maintain market integrity and prevent market manipulation
- Trading Halts: Trading may be halted under certain conditions, such as extreme volatility, technical issues, or significant news events. Halts are designed to maintain order and stability in the market
- Clearing and Settlement: After trades are executed, the Central Securities Depository, ensures that trades are settled by transferring securities and funds between buyers and sellers.
- Post-Trade Reporting: The exchange reports executed trades and trade data to participants and the public. This data includes the trade price, volume, and other relevant details.
Trading Calendar
The ESX shall open for trading on all business days in Ethiopia. Trading shall be conducted at specified times as may be determined by the ESX. ESX may extend, advance, or reduce trading hours by notifying Trading Members as may be necessary. Unless otherwise specified by the Board of Directors of the ESX, the exchange shall be open for trading from 9:00 to 3:00 EAT, as follows:
| Session | Time | Price Limit |
|---|---|---|
| Pre-open | 9:00 AM – 9:30 AM | – |
| Continuous | 9:30 AM – 3:00 PM | – |
| Close | 3:00 PM | – |
Public Holidays / Closing Days (2024 -2025)
| Date | Holiday |
|---|---|
| Tuesday, Jan 7 | Ethiopian Christmas / Gena |
| Sunday, Jan 19 | Epiphany/Timket |
| Sunday, Mar 2 | Adwa Victory Day |
| Saturday, Mar 8 | International Women’s Day |
| Monday, Mar 31 | Eid al-Fitr (Tentative Date) |
| Friday, Apr 18 | Ethiopian Good Friday |
| Sunday, Apr 20 | Ethiopian Easter/Fasika |
| Thursday, May 1 | International Labor Day |
| Monday, May 5 | Patriots’ Victory Day |
| Wednesday, May 28 | Derg Downfall Day |
| Saturday, Jun 7 | Eid al-Adha (Tentative Date) |
| Friday, Sep 5 | The Prophet’s Birthday |
| Saturday, Sep 11 | Ethiopian New Year |
| Thursday, Sep 27 | Meskel (Finding of the True Cross) |
Trading rules
ESX Trading rules set out specific guidelines and regulations that govern trading activities of trading members. These rules are designed to ensure fairness, transparency, and the orderly functioning of the market while protecting the interests of market participants. ESX trading members are at all times require to abide by the rules as they contribute to:
- Orderly Trading: Rules help maintain order in the market by specifying how orders should be placed, executed, and canceled. They establish guidelines for trading hours, circuit breakers, and trading halts in case of extreme market volatility.
- Market Integrity: ESX trading rules are designed to maintain the integrity of the market by preventing fraudulent and manipulative activities. They establish guidelines to prevent market abuse, insider trading, and other illicit practices.
- Fairness: The rules promote a level playing field for all market participants, ensuring that no one has an unfair advantage. They help prevent market manipulation and create an environment where investors can trade with confidence.
- Investor Protection: The rules provide safeguards to protect the interests of investors. They among others require trading members to have certain financial resources and risk management procedures in place to protect clients’ assets.
- Risk Management: The rules incorporate risk management measures to mitigate the potential for excessive market volatility or sudden market crashes. These measures include price limits, circuit breakers, and other types of similar measures.
- Investor Confidence: Clear and consistently applied rules enhance investor confidence in the market. When investors believe that the market is well-regulated and follows established rules, they are more likely to participate.
- Standardization: Rules help standardize trading procedures and ensure that everyone follows the same set of guidelines, which simplifies trading and reduces the potential for disputes.
- Dispute Resolution: ESX rules provide a framework for resolving disputes between market participants.