FOCUS: Could you give us a bit of background about your exchange?
CSE: The Casablanca Stock Exchange was established in 1929. It has since undergone a number of reforms, the most significant one being that of 1993 which resulted in it becoming the market that we recognise today.
The Casablanca Stock Exchange is today a société anonyme with a board of directors and a general management team, operating under the supervision of the Ministry for the Economy and Finance with a specific remit. The Casablanca Stock Exchange is currently in the process of being demutualised.
Our task is to ensure the proper functioning of the Moroccan stock market, its development and its promotion.
The Moroccan stock market has developed considerably over the years. Securities have been traded via an electronic quote-driven trading system since 1997, the latest version of which was introduced in 2008.
The market, in terms of size, has also grown significantly! The number of companies listed on the Exchange has risen by 43% from 53 listed companies in 2004 to 77 at end-May 2013. Market capitalisation has more than doubled from USD 25 billion to USD 53 billion. It’s a similar story for capital-raising. USD 2.1 billion was raised in 2012 and a total of USD 16 billion over the period 2003-2012.
The Casablanca Stock Exchange is a cash market on which equities, bonds, venture capital funds and special purpose vehicles are traded.
A series of regulatory reforms are underway which will result in a number of new products and markets being introduced. Legislation authorising securities lending has recently been approved and will come into effect in the coming weeks.
FOCUS: How active are foreign investors in your exchange? How accessible is your market?
CSE: Foreign investors represent 29% of the market capitalization and account for nearly 20% of the volume traded on the market. In Morocco, there is no regulatory barrier to foreign investment. On the Casablanca Stock Exchange, foreign investors are able to invest in any listed company or sector without any restriction.
At 31 December 2012, the banks, telecommunications and real estate sectors accounted for a large share of overall market capitalisation with shares of 33.3%, 21.0% and 9.27% respectively.
FOCUS: What new project/product are you currently working on?
CSE: As you are aware, Morocco aims to become a regional financial hub with the creation of Casablanca Finance City. The spotlight from the international investment community will undoubtedly fall on the Casablanca Stock Exchange.
This is why we have been working for several years on different ways to develop our stock market. The Casablanca Stock Exchange is already one of the most modern and progressive in terms of market technology. After migrating to an electronic quote-driven trading system in 1997, we adopted a more advanced version in 2008. We are currently in the process of introducing a multi-market trading platform.
We are also preparing for the introduction of new financial instruments which will enable us to broaden our product range (REITs, ETFs etc.). Other projects on which we are currently working include a new clearing house and the launch of a derivatives market.
In addition, we are considering possible regulatory changes relating to the introduction of new compartments for SMEs. This would imply a significant relaxation of listing criteria and reporting rules.
We have also considered revising the Stock Exchange’s current compartments system to respond to the demands of listed companies and those that are considering a listing.
FOCUS: What are the challenges you see in your market today and in the future?
CSE: There are many! First and foremost, liquidity; in January 2013, we launched a series of technical measures aimed at increasing market liquidity. There are five measures: extending price change limits and trading hours, reducing tick sizes, increasing the minimum disclosed size for “iceberg” orders and reducing the period of time for halting securities trading from 10 minutes to 5 minutes when price change limits are breached. We have also launched liquidity contracts in order to promote market makers activity in our market.
The second challenge concerns the market’s attractiveness. By that I mean providing more opportunities and making it easier to invest, particularly for foreign investors. Introducing a foreign currency compartment, offering greater diversity and revising the Exchange’s compartments system are some of the key measures required to make the Casablanca Stock Exchange more attractive.
Another challenge is to position the Casablanca Stock Exchange as one of the major exchanges in Africa. We must inevitably reach a critical size which will enable us to become a regional pool of liquidity for North and West Africa. That implies an increase in both the number of investors and listed companies.
To reach our goals, we have implemented a promotional strategy focusing on providing financial education to the general public as well as a marketing plan to attract more companies to the Exchange. We have participated in a number of events and have conducted a communications campaign targeting potential issuers and investors. We are encouraging SMEs to list their shares by offering financial, particularly tax incentives. We have signed a number of partnership agreements with schools and universities across the Kingdom aimed at developing financial education through training and raising public awareness.
FOCUS: How do you assess your exchange’s position at a time of increased globalization?
CSE: The Casablanca Stock Exchange is one of the largest exchanges in Africa. Given the country’s ambition of becoming a regional hub, the Casablanca Stock Exchange, which plays a major economic and financial role in financing the Moroccan economy, must confirm its status as a new frontier market. The current market reforms being undertaken will enable the Casablanca Stock Exchange to broaden its product range. This will not only make it more competitive but will enable it to respond to the financing needs of the entire region and ultimately gain in stature as a major financial market place.