Moroccan Law on the Securities and Exchange Board

The financial landscape in Morocco has undergone significant modernization to align with international standards and foster investor confidence. At the heart of this transformation is the legal framework governing securities, exchange activities, and the regulatory oversight of financial markets. Understanding these laws is essential for both domestic and international investors looking to navigate the Moroccan capital market.

The Moroccan legal system provides a robust structure for the issuance, trading, and management of financial instruments. This article explores the primary regulatory bodies, the legal requirements for market participants, and the specific rules governing the stock exchange and credit institutions.

The Regulatory Framework of the Moroccan Capital Market

The primary authority overseeing the Moroccan financial market is the Moroccan Capital Market Authority (AMMC - L'Autorité Marocaine du Marché des Capitaux). Under the laws relating to the stock exchange and financial investment advisors, the AMMC is responsible for ensuring the transparency and integrity of the market.

According to the general regulations of the stock exchange, the regulatory framework defines several critical operational aspects:

1. Listing and Delisting: Specific rules govern how financial instruments are admitted to price listing, how they are maintained, and the procedures for their removal.
2. Market Segmentation: The law distinguishes between the "Main Market" and the "Alternative Market," providing procedural rules for the operation of each to accommodate different sizes and types of companies.
3. Trading Mechanisms: Regulations set forth the methods for block trading and the transfer of financial instruments between different sections of the same market or between different markets.
4. Foreign Issuers: The law establishes conditions and methods for pricing financial instruments issued by entities or legal persons that do not have a registered head office in Morocco.

Furthermore, the law mandates that brokerage firms must provide specific documentation to the managing company of the exchange, and it empowers the managing company to request necessary information from issuers of financial instruments to maintain market order.

Oversight of Credit Institutions and Financial Conglomerates

Moroccan law extends its reach beyond the stock exchange to cover credit institutions and "considered equivalent" bodies. Law No. 103.12 is the cornerstone of this regulation, placing significant emphasis on governance and risk management.

Credit institutions are required to:

• Establish internal control systems and risk management mechanisms.
• Appoint two statutory auditors to ensure financial accuracy.
• Provide all necessary documents and information to the regulatory authorities.

A key feature of Moroccan financial law is the regulation of Financial Conglomerates. Under Article 21 of Law No. 103.12 and Joint Circular No. 01.23 (issued by the Governor of Bank Al-Maghrib, the President of the Insurance and Social Security Supervisory Authority, and the Chairperson of the AMMC), financial groups are subject to strict supervision. These circulars, once approved by the Minister of Finance and published in the Official Gazette (Al-Jarida al-Rasmiya), define how these large entities must operate to prevent systemic risks.

It is important to note that certain entities are exempt from the specific provisions of the Credit Institutions Law. According to Article 23, these include Bank Al-Maghrib (the Central Bank), the General Treasury of the Kingdom, postal money order services, and insurance/reinsurance companies (which are governed by the Insurance Code, Law No. 17.99).

The Role of Bank Al-Maghrib and the Futures Market

The Central Bank, Bank Al-Maghrib, plays a dual role as both a participant and a regulator. Historically, the bank has been responsible for the issuance and withdrawal of currency, as seen in various decrees approving the circulation of new banknotes and the withdrawal of older denominations.

In the context of modern financial instruments, Law No. 42.12 governs the Futures Market (Marché à Terme). This law ensures the smooth functioning of the futures market and the clearing house. Oversight is shared between Bank Al-Maghrib and the AMMC (formerly the CDVM):

• Bank Al-Maghrib monitors the clearing house's compliance with risk management obligations.
• The AMMC monitors the managing company’s compliance regarding the supervision of trading members.

Both the managing company and the clearing house are legally obligated to provide periodic reports and documentation to these regulators. If a dispute arises regarding decisions made by these market managers, the Minister of Finance holds the authority to make a final determination.

Practical Applications for Investors and Businesses

For a business looking to enter the Moroccan market, several institutional procedures must be followed. For instance, the Moroccan Office of Industrial and Commercial Property (OMPIC) manages the electronic platform for creating companies. Under Article 11 bis of its founding law, fees for these services are determined by agreements between the State and relevant bodies.

When dealing with financial transactions, parties must be aware of the "Public Debt Collection Code" (Law No. 15.97), which governs how debts owed to public institutions are recovered.

Key takeaways for market participants:

• Transparency: All major circulars and regulations must be published in the Official Gazette to be enforceable.
• Governance: Institutions must maintain rigorous internal controls and are subject to audit by two independent auditors.
• Compliance: Brokerage firms and credit institutions must adhere to the "General Regulations" (Nizam al-Am) which dictate everything from guarantee deposits to the technicalities of transaction completion.

Conclusion

The Moroccan legal framework for securities and financial markets is a sophisticated system designed to balance market freedom with investor protection. By centralizing oversight through the AMMC and Bank Al-Maghrib, and by maintaining clear rules for listing, trading, and risk management, Morocco continues to strengthen its position as a leading financial hub in Africa. For any investor or legal professional, staying updated with the circulars published in the Official Gazette remains the most reliable way to ensure compliance with this evolving legal landscape.

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