MOVE WITH THE TIMES

Morocco 2020/21 | FINANCE | INTERVIEW

In light of several structural changes to Morocco's capital markets, including greater professionalism and better standards on an international level, CDG Capital Bourse has adapted accordingly and emerged more successful.

Rachid Outariatte
BIOGRAPHY

Rachid Outariatte is the President of APSB & CEO of CDG Capital Bourse. He is also a certificate independent director of the Moroccan Institute of Directors. Outariatte holds an executive MBA from the National School of Bridges and Roads and a DEES in banking and finance from the Conservatory of Arts and Trades (Paris). He graduated from the Higher Institute of Business Administration (ISCAE). He previously held several management positions in Société Générale Group Morocco including director of the private management sector, member of the management board of Sogécapital Gestion, and director of the Front de Sogécapital Bourse.

As president of APSB, what are your thoughts on the lack of liquidity that brokerage firms are facing and its impact on the capital market?
For traders and the market, which is a healthy one, it is important that the stock prices, with significant trades, reflect the economic reality of the companies and therefore the market. Our exchange market is dominated by institutional owners, which is a positive thing, as institutional investors have a long-term outlook. Institutional buys, however, tend to establish solid and lasting trends. On the other hand, they play an increasing role in cross-sectional variation in stock market illiquidity. Insurance companies, for example, invest almost 50% of their assets in the equity market, which is more than the international standards (less than 10%). In recent decades in Morocco, there has been rapid growth in institutional ownership of common stocks and an increasing presence of institutional traders in stock market that reduced the free float, meaning less shares for sale, which has implications for the liquidity, prices, and valuation of Moroccan equity markets. Another factor is that MSCI downgraded Morocco from emerging market to frontier market for a single reason, namely liquidity. Morocco went from being a market exposed to billion-dollar investments on the radar of major international institutions to the frontier index, a market where there are not as many assets as in emerging markets, even if the Moroccan allocation is higher. It is necessary to implement, or rather amend, the law on securities borrowing and lending. Since there are new laws in the pipeline, we want to include in the first law on lending and borrowing securities the different investors that were excluded from the original law text. A new pool mode that allows anonymity of transactions, which is important too, was also introduced.

You have been the head of CDG Capital Bourse for almost 12 years. What have been the major achievements?
Many structural changes (new rules, greater professionalism, and better standards on an international level) have occurred in the stock exchange sector in general, and the APSB, as a stakeholder, took part of this new dynamic. For example, the watchdog became more independent, strong, and efficient, and the stock exchange demutualized, modernized its information system, and set up a new ambitious strategy. Maroclear (Central Depository of Securities) has issued several updates of its information system with new standards and new rules, so we had very challenging years. As for CDG Capital Bourse, these 12 years have been particularly intense since we adopted new strategies aimed at improving our staff expertise and customers experience to stay on top of market trends. We launched the best online stock exchange platform for retail and digitalized our order management system (OMS) that enables us to process client orders from end to end for institutional. We have also developed and implemented an accreditation procedure to ensure that every professional in the field has the appropriate skills and knowledge to practice. This is an important measure for our market because it guarantees that our clients, both local and foreigners, interact with qualified professionals.

How did APSB and the stock exchange manage the COVID-19 crisis?
The market and operators have demonstrated strong resilience and a great capacity for adaptation and innovation. Indeed, stockbroking firms were able to reorganize themselves rapidly into teleworking and adopt measures to protect their employees and customers. Thanks to the mobilization and collaboration of the various partners, the Moroccan Capital Markets Authority, the Casablanca Stock Market, and Maroclear, the market operated normally, and clients were able to carry out their operations in the best conditions. During this period, volumes experienced a significant increase with a notable increase in volatility. This is due to the uncertainty about the impact of COVID-19 on firms and the economy.