4th Quarter 2014 www.cdvm.gov.ma– 1 –

International

Participation of the CDVM at the conference on investment opportunities in Morocco, which was organized by the Embassy of Morocco in the UK in London on October 22, 2014. On the sidelines of the conference, the CDVM visited the authority of the UK financial market “Financial Conduct Authority” (FCA).

The CDVM chaired the first conference on Arab capital markets from 25 to 26 November 2014 in Dubai. The conference was organized by the Arab Union of regulators, chaired by the CDVM. The conference was an opportunity to debate on the importance of cooperation and integration in the MENA region, and the need to address the challenges facing Arab capital markets. The discussion also highlighted the opportunities for financial and technological innovations in the region.

As an active member of IOSCO committee on the regulation of market intermediaries, the CDVM attended the third working meeting of that committee from 2 to 3 December 2014 in Bucharest. The meeting was an opportunity to move forward on the regulation of crowd funding, rating agencies and cyber security.

Finally, in the context of cooperation with the Financial Market Supervision Commission of Central Africa COSUMAF, the CDVM contributed to the work of the regional seminar on the outreach of Community Regulation on the book entries of securities and other financial instruments. During the seminar, which was held from 10 to 11 December 2014 in Yaounde, the CDVM outlined the Moroccan experience of securities dematerialization and book entry system of securities.

Table of contents

Private debt financing market

The private debt financing market is an important funding channel for both private and public companies. Indeed, such funding is predominant in the Moroccan stock exchange, where issuance of shares remains very low compared to the issuance of debt securities.

On the quantitative level, the number of issuers who have issued debt securities increased from 20 in 2013 to 33 in 2014, covering all the vital sectors of the economy (banking, real estate, distribution, energy, heavy industry…). However, it is appropriate to note that debt securities are primarily issued by credit institutions, in the form of certificates of deposit, corporate bond of finance companies, or bonds. This finding coupled with the fact that the stock of private debt accounts for almost 25% of outstanding bank loans, herald a significant potential of private debt market development. However, this development requires the introduction of appropriate measures, taking into account the current market environment, marked by a more pronounced risk aversion.

In response to this phenomenon, the issuers, for their part, began to match their issuances with mechanisms to reduce the risk perceived by investors and therefore optimize the issuance output conditions. Thus, some chose to match their actual issuance of security interests with loan hedging, while others have opted for rating to provide investors with an objective measure of credit risk. The financial covenants are also starting to be used.

Recognizing the important role of the debt market in financing the economy and the

Edit

opotential it holds, the CDVM has taken several steps to support the development of this market, through various measures targeting both the investors and issuers.

The CDVM encourages, in the first place, the recourse to rating which can play an important role in improving transparency and market liquidity. However, the cost of its implementation can be an obstacle for some issuers. Thus, the CDVM applies a reduced commission rate by almost half on visa for issuers who have provided a rating and a commitment to renew it at least each three years. To further enhance the impact of this measure, an exemption from the Commission on visas for non-financial issuers subject to a rating, is expected to take place soon.

Regarding warranties and security interests, the CDVM examines with market participants the possibility of setting up guarantee mechanisms for SMEs issuances, in order to improve their output conditions on the debt market while securing their issuances.

Also, with the aim of strengthening investor protection and further enrichment of periodic information of issuers, the CDVM has proposed to improve the performance of the representation framework of bondholders through the clarification of rules of designation, compensation and communication on the mission of representing bondholders.

In terms of facilitating securities placement, a relaxation of the private placement procedure is considered, in particular through increasing the number of qualified investors who may participate in such operations.

In the same sense, it is intended to ease the terms of debt securities issuance not giving access to capital, moving, like other forms of debts, towards rapid and effective decision processes in which the body empowered to rule on the issuance

N° 204th Quarter 2014 www.cdvm.gov.ma

Quarter figures in billions of Dhs

Raised debts Trade volume UCITS net asset Q4 2013 0

– 15%

Q4 2013 23.822.42%

Q4 2013 245.5

Q4 2014 5.25 Q4 2014 20.2 Q4 2014 300.5

could be the Management Board or Board of Directors.

Finally, many actions are carried out in order to broaden the range of debt instruments available to issuers and investors. As such, several draft texts have been prepared and are now either in the process of adoption or in implementation, to introduce new products such as covered bonds, ETFs bond, sukuk…

Financial transactions authorized by the CDVM in 2014 P2

Key indicators of the fourth quarter 2014 P3

@CDVM P3

Mr Mouad TANOUTIHead of the Market Monitoring and Projects Unit

P4

Focus : Key indicators of foreign investment on the stock market in the first half of 2014

P4

4th Quarter 2014 www.cdvm.gov.ma– 2 –

Financial transactions authorized by the CDVM in 2014

As part of its mission to examine public offerings files, the CDVM has authorized, in 2014, 41 public offerings related to the following operations:

•  Capital increases and IPO;

•   Subscription offers by foreign groups reserved to Moroccan employees;

•  Bond issues;

•  Commercial paper issuance Programs.

Before issuing the visa, the CDVM checks the compliance of the operation with legal and regulatory provisions in force. Also, it conducts extensive due diligence to ensure that the information document authorized contains the necessary information to the public target of the operation to make decisions knowingly.

As such, the CDVM ensures that the information document conforms to the regulations, and that the information it contains is relevant to the proposed transaction and does not contain inconsistencies.

1. Capital increases

In 2014, the CDVM has authorized 5 capital increases (excluding IPOs) for a total of nearly 950 million dirhams against 4 billion dirhams in 2013.

These operations involve three major types of capital increases: the contribution by capital increases in cash, increases by conversion of dividends in 2012 and increases in capital by merger.

Issuer Visa date Operation Nature Total amount

ALLIANCES DEVELOPPEMENT IMMOBILIER

03/24/2014Capital increase (reserved to SFI)

207,694,912

BMCI BANKBANQUE MAROCAINE POUR LE COMMERCE ET L’INDUSTRIE

07/24/2014Capital increase through merger

324,899

CREDIT DU MAROC 08/06/2014Capital increase through conversion of dividends

237,727,350

COLORADO11/10/2014 Capital increase

(reserved to employees)11,600,000

SBMSOCIETE DES BRASSERIES DU MAROC

05/26/2014Capital increase through merger

493,991,381

Furthermore, the CDVM has authorized a single IPO operation through a capital increase for RESIDENCES DAR SAADA Company amounting to 1.127 billion dirhams.

2. Public offerings Transactions carried secondarily in Morocco

As part of strengthening their employees share ownership, 9 foreign groups have launched subscription offers to their employees. These groups are: Suez Environnement Company, Vinci, Société Générale France, COFACE (SA), AXA (France), SAFRAN, CAPGEMINI, Nexans, Total France.

3. The tender offers

During 2014, the CDVM has authorized three public offerings files:

•  One squeeze-out offer on MEDIACO Company;•  One takeover bid of COSUMAR shares;•   And one public offering for sale in the form of shares transfer 

of Lesieur Cristal shares held by the national investment company (SNI).

4. Debt securities transactions

• Bond issues

During 2014, the CDVM has authorized 13 bond issues transactions for an amount of 11.7 billion dirhams against only one file in 2013 covering an amount of 1.25 billion dirhams.

Issuer Visa date Operation nature Total amount

AXA CREDIT 03/11/2014 Subordinate bond issue 60,000,000

JET ALU SA 03/11/2014 Bond issuance 300,000,000

CGICOMPAGNIE GENERALE IMMOBILIERE

06/13/2014 Bond issuance 1 500,000,000

DOUJA PROMOTION GROUPE ADDOHA

07/16/2014 Bond issuance 2,000,000,000

BMCE BANKBANQUE MAROCAINE DU COMMERCE EXTERIEUR

07/25/2014 Subordinate bond 1,000,000,000

RISMA 07/31/2014Bond issue (share-redeemable bonds)

636,753,200

WAFASALAF 10/21/2014 Subordinate Bond issue 200,000,000

ZALAGH HOLDING 11/03/2014 Bond issue 350,000,000

FECFONDS D’EQUIPEMENT COMMUNAL

11/11/2014 Bond issue 1 000,000,000

LABEL VIE SA 11/14/2014 Bond issuance 1 500,000,000

BCPBANQUE CENTRALE POPULAIRE

11/27/2014 Subordinate bond issue 1,000,000,000

ATTIJARIWAFA BANK 12/03/2014 Subordinate bond issue 1,200,000,000

CIH BANKCREDIT IMMOBILIER ET HOTELIER

12/19/2014 Subordinate bond issue 1,000,000,000

• Commercial paper issuance

In 2014, the CDVM has authorized a single file on the establishment of commercial paper issuance program. This program concerns Valyans Consulting Company for an amount of 100 million dirhams. It should be noted that in 2013, the CDVM has authorized two files on the establishment for a total amount of 900 million dirhams.

In addition, 12 information files about updates of issuance programs were authorized in 2014 against 10 in 2013.

5. Buybacks transactions

4 buyback programs to regularize the price were authorized by the CDVM in 2014. These Buyback programs total a maximum overall amount of nearly 870 million dirhams.

Issuer Visa date Total amount

DOUJA PROMOTION GROUPE ADDOHA 24/02/2014 258,045,680

ITISSALAT AL-MAGHRIB 04/04/2014 202,500,000

BMCI BANKBANQUE MAROCAINE POUR LE COMMERCE ET L’INDUSTRIE

18/04/2014 136,771,640

ATLANTA 01/09/2014 270,856,890

4th Quarter 2014 www.cdvm.gov.ma– 3 –

Key indicators of the fourth quarter 2014

Operation nature Operation typeOperation

number

Capital increaseSubscription offer reserved to employees 5

IPO 1

Public offer Squeeze-out offer 1

NDS issuanceUpdate of information related to issuance program of commercial papers

6

Bond issuanceDebenture loan 3

Subordinate debenture loan 4

Total 20

Financial operations authorized by the CDVM Visas and UCITS authorization

Number

Approval / Creation 10

Approval / Approval renewal 23

Visa / Creation 11

Visa / Approval renewal 28

Visa / Update 18

Total 90

@CDVMQ.1 As part of the implementation of an issuer buyback program, can the brokerage firm in charge of implementing the buyback program determine the price range of the latter in the prospectus?

The determination of the price range under a buyback program is a prerogative that falls within the exclusive competence of the shareholders’ meeting called to approve the said program (article 281 of Law No. 17-95 on Limited companies).In addition, worth to recall that the brokerage firm designated by the issuer is charged exclusively with the execution of the buyback program as authorized by the shareholders’ meeting and in accordance with the terms of the agreement signed to this effect with the said issuer (Art. I.4.21 and following of the CDVM Circular).Furthermore, the preparation of a prospectus is an obligation to be fulfilled by the issuer (III.2.41 III.2.49 articles of the aforesaid Circular) who can, if necessary, delegate, under his responsibility, a financial advisor of his choice for preparing the prospectus, in accordance with the standard model presented in Appendix III.2.N of the aforementioned circular.

Q.2 What are the measures to be taken by a brokerage firm or a custodian for customers who register successive returns of post? Should it be suspended till checking the customer address?

Article I.2.6 of the CDVM Circular requires from custodians to provide their customers with their statements of securities valued at the last quoted price of the reporting period and, on a quarterly basis, within fifteen (15) days following the end of the quarter. Article I.3.28 of the said Circular also requires the brokerage firms to send their customers a quarterly operation backlog, which summarizes all the transactions for their

respective accounts within a deadline which cannot exceed fifteen (15) days from the closing of the quarter in question.Considering these obligations, it should be recalled that the account opening for a customer meets a set of rules, including signing an agreement and holding an identification file per customer, the keeping and update of which should be either by the brokerage firm or the custodian in accordance with the provisions of law 43-05.This requirement allows the participant to request the customer for update of contact details including the mail address.Also, as it is up to the participant to fulfill the obligation of sending periodic information to customers, and update their files, he is allowed to seek this information, by any means at his disposal, in order to redress the causes of posts returns. The latter cannot justify the failure to fulfill the disclosure requirements for the customers.

Q.3 Should the shares allotted by a listed company to a buyback program be deposited with the custodian brokerage firm that is also in charge of the management of the said program?

The management and execution of a buyback program by a brokerage firm makes no influence on the latter and on the obligation to keep the allocated shares of the said program by the listed company.Also, no prohibition precludes the fact that a brokerage firm not authorized to exercise the custody activity to manage and execute a share buyback program of a listed company whose shares are held with another brokerage firm authorized to exercise custody, subject to compliance with the provisions of articles I.4.23, I.4.24 and I.4.25 of the CDVM circular.

Net asset by UCITS category on 26-12-2014 in billions of dirhams

Structure of net assets by UCITS category

49.9%

0.3% 7.0% 3.8%

24.5%

14.5%

149.84

73.69

21.09

43.57

11.311.04

0

20

40

60

80

100

120

160

140

M&LTB Monetary Securities STB Diversified Contractual

 Securities Diversified Monetary Short term bonds  Medium and long

term bonds Contractual

4th Quarter 2014 www.cdvm.gov.ma– 4 –

Focus

Key indicators of foreign investment on the stock market in the first half of 2014

The value of foreign investments in shares listed on the Casablanca Stock Exchange recorded an increase of 1.60%, moving from 137 billion in December 2013 to 139,2 billion in June 2014. This slight increase is mainly due to the positive evolution recorded by Casablanca Stock Exchange during this period (+ 1.23% for the MASI).

The geographical origin of foreign and Moroccans Resident Abroad (MRA) capital witnessed a noticeable change in the first half of 2014 due to the sale operation carried by Vivendi of its ownership interests in Maroc Telecom to Etisalat.

Slight increase in the market capitalization share held by non-resident investors and MRA due to the price effect

The total value of foreign investment in listed securities rose by 1.60% compared to end of December 2013 to move from 136.99 billion to 139.18 billion dirhams, continuing the upward trend in 2013. This increase is mainly due to the positive performance of Casablanca Stock Exchange during the period.

At constant prices, there is however a stagnation since the stock held by foreigners and MRA on June 30th, 2014 was valued at 136.63 billion dirhams against 136.99 six months earlier.

Evolution of listed securities share held by foreigners & MRA in the Market Cap

(In billions of Dhs)

Outstanding held Foreigners & MRA Market Cap

Average rates of Custody

Source: Custodians, Casablanca stock exchange, CDVM calculations.

Net Presence of strategic participations

The proportion of strategic holdings in the amount of foreign investment in listed shares is almost identical to that recorded in late last year and stands at 89.80 % in June 2014 which represents 27.38 % of the market capitalization in 2014 against 27.18% in December 2013.

Dominance of non-resident foreign corporations

The amount invested by non-resident investors (corporations), was up 2.33% in June 2014, with 137.2 billion dirhams. The share of this category of investors increased slightly compared to December 2013 and represents 98.61 % of the amount of foreign investment in listed shares. This percentage is virtually unchanged since 2005.

Increase of foreign investment in UCITS securities

On June 30th, 2014, the amount of foreign investment in UCITS shares reached 1.053 billion dirhams against 944.2 million dirhams in December 2013, recording an increase of 12%. It is noteworthy that during the first half of 2014, the total net assets under management of UCITS rose by 13% to stand at 277.3 billion against 245.5 billion at the end of 2013.

The project to create a futures market of financial instruments is being translated into concrete actions. Could you give us an overview?

The main achievement recorded in 2014 is obviously the adoption of Dahir No. 1.14.96 promulgating Law No. 42-12 on the futures market and its publication in the Official Bulletin. As a regulated market, it was essential to set at a specific law providing the basic principles that will govern it. Now that the legal framework is adopted, an intense regulatory work is expected for the year 2015 in order to give substance to the regulatory framework, which is essential to the functioning of this market. This framework, in fact covers several aspects of extreme importance such as the supervision of institutions and infrastructure (approvals, membership etc.), the organization of the regulation and supervision of the market (the operationalization of coordinating body of the futures market made up of the CDVM and BAM) and market security framework (creation of a clearing house, setting prudential rules, etc.).

The CDVM is working on all of these issues in close collaboration with partners involved in the project, particularly the Treasury and Bank Al-Maghrib. Note for example that the bylaws of the market Managing Company and the clearing house are being finalized and the futures market coordinating body operationalization started.

The clearing house is one of the pillars on which will be based the futures market, what progress has been made on the establishment of this structure?

Indeed, the market model used by law aligns with international standards that provide a central place to the clearing house in the market general structure, in view of the nature of products and futures market systemic dimension. The law established the main functions of the clearing house and its status. The second step is to create the legal structure, set its capital and shareholders and define the terms of its operationalization. With regard to the latter, it is useful to recall that the CDVM takes part in the work of the Steering Committee of the project to create the clearing house, initiated in 2013 by Bank Al-Maghrib with the assistance of International experts. The first assessment phase ended with practical proposals for key operational dimensions of the clearing house (organization, functional architecture, risk management, business Model, etc.).

What are the other major projects associated with the implementation of futures market?

The implementation of a futures market is a structural and multi-dimensional project. It involves several actors and calls for greater coordination of actions. Three dimensions seem important to us: the institutional organization, both capital and operational in order to consolidate the gains around a model of  strong and efficient market;  the choice of  technical infrastructure and actors who will deploy them within logic of resources rationalization; the establishment of regulatory tools to ensure an orderly and safe operation.

All these actions will, of course, be accompanied by educational training and promotion to bring the actors together around the project and increase its success chances.

Flash Interview

Mr Mouad TANOUTIHead of the Market Monitoring and Projects Unit