As part of a series of wide-ranging reforms aimed at revitalising the Casablanca Stock Exchange (CSE), the authorities have been working on launching a number of new products, vehicles and activities in recent years; this rollout gathered pace in 2016.
Tradeable Funds
Prominent among these are several types of tradeable investment funds. The lower house of parliament approved a draft law establishing a market in listed real estate investment trusts (Organismes de Placement Collectif en Immobilier, OPCI) in February of 2016, though the legislation awaits final approval. Observers say the market will also require changes to the tax regime in order to take off, and that such changes are expected next year. “There will be strong client interest in OPCIs, as well as other new products in the pipeline, which will also help strongly with market diversification,” Amine Amor, general manager of BMCE Capital Gestion, told OBG. Planned changes to the stock exchange law approved by the lower house of parliament in June 2016 and the imminent launch of a new trading platform at the CSE, will also allow for the introduction of exchange-traded funds, although this will also require a change to the local law on mutual funds, which is planned but had not been implemented as of April.
Hedging Products
Separate efforts are also being undertaken to create a local futures market. A law establishing a futures exchange was published in the Official Gazette in October 2015. However, several further steps need to be taken before the market is fully operational, including the passage of regulations implementing the legislation, as well as the establishment of a clearing house, which Hicham Elalamy, director of the Moroccan Capital Markets Authority, said would take some time.
Elalamy also told OBG that there were plans to amend the existing futures market law in order to cover over-the-counter transactions, though he said these reforms remained in the planning stages.
A law allowing for securities lending – effectively permitting short-selling on the market – that came into effect in 2014 is also to be amended to make it less restrictive, by allowing for the lending of pooled securities and giving traders a choice of contract models, for example. The authorities also intend to clarify ambiguities in the current law on issues such as whether securities lending is open to foreigners. Karim Gharbi, head of research at Casablanca Finance Group, told OBG that there had been little in the way of securities lending in the kingdom since the activity was permitted, and that demand for other sophisticated products such as futures also appeared limited. However he said that plans to liberalise the country’s currency regime (see Economy chapter) would likely generate interest in the future, although major reform is not expected for several years. “A liberalised exchange rate regime would lead to more volatility, which in turn would generate more demand for hedging products,” Gharbi told OBG.
Private Equity
The Moroccan investment industry is also awaiting the approval of regulations to implement a new law passed in March 2015 in relation to a relatively well-established class of alternative assets, namely private equity products. Notable changes in the legislation include the replacement of a previous requirement for funds to invest half of their assets in small and medium-sized enterprises; the obligation now just refers to unlisted companies.
In 2015, 24 private equity firms were active in the country. “The government is very keen for the segment to develop, in particular as regards venture capital,” Françoise De Donder, managing director of the Moroccan Association of Capital Investors, told OBG. There were 11 private equity investments made in 2015, worth a combined Dh606m (€55.6m), bringing the value of such investments in Morocco since 2000 to Dh5.5bn (€504.3m). Around half of these investments have gone into industrial firms in recent years.
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