Ethiopia is in the process of developing its own stock market. However, it is almost inevitable that a strong and reliable stock market requires developing a strong security system along with the establishment of the market platform.
This was implicated even during the public hearing on the draft bill that was convened by the revenue, budget, and finance standing committee of the Ethiopian Parliament some months back. During the hearing process, this issue was raised by stating concerns regarding the chance of having malpractices in brokers and unethical employees that have improper relations with stakeholders and might put at risk the integrity of the established stock market.
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In order to manage this type of malpractices, there is a need of establishing a strong security system along with the ongoing institutional framework. Especially, having well-trusted employees with strong integrity is critical in an effort to avoid the risk of breaching confidentiality that may leak information and secrets of the trade. Of course, this information might be about the transaction, the stock trades, or anything related to it, and that ultimately spoils the trust of the market.
Conceptually, the stock market is a very sensitive, secretive as well as complex transaction. Accordingly, any leaked information about the market transaction should be safe and keep confidential by anyone who has access to it. To this end, there has to be a tracing mechanism to make transparent business among traders and maximize trust. The market shall provide a security and information technology platform since trade information is a very critical instrument in any stock market and it should be provided equitably to all traders with the same time advantage.
Unless there is no strict controlling and security mechanism, the trading system that highly demands competition would be unfair and it may vanishes confidence. In line with this, it is very critical to create a strong security mechanism for the Ethiopian stock market in order to have a strong and reliable trade platform.
