c hallenging new business opportunities & it platform maroclear perspective

1. challenging new business opportunities & it platform maroclear perspective

2. Abstract This paper presents an analysis of the New IT platform implementation project of the Moroccan central securities depository (MAROCLEAR). This project was carried out with the objective of devising a new strategic repositioning and a new business opportunities for the company. MAROCLEAR main function is to serve not only as a depository institution but also as a reliable means for the clearing and settlement of securities transactions (Securities Settlement System). Consequently, information systems and technology are the basis for its operations. At a high scope, the rational behind the implementation of the new platform implied defining a new mission, vision. At a business strategic level, it implied reorganizing business lines and the modeling and redesign of business processes, while keeping focus on the corporate strategy. In addition, a series of key constraints were considered : (i) improvement of straight through-processing (STP) in all operations; (ii) Remodeling processes and services and not reinventing new ones; (iii) increment of process flexibility, and (iv) pursue of low maintenance costs. Thus, this project represent a useful benchmark for those interested in new IT platform project being an instrument for a corporate strategy repositioning.

3. Summary 1 maroclear environment challenging new business & strategy redefinition 2 • conclusion 3

4. 1. maroclear • the moroccan central securities depository maroclear at glance • In Morocco, the Casablanca stock exchange is compounded by 70 issuers and has a market valueestimated at 486 MAD billion (58 US Billion) • Since July 1997, MAROCLEAR has been the Moroccan Central securities Depository, providing custody, safekeeping, clearing, settlement and book entry-transfer services for the Moroccan financial industry. In a daily average, MAROCLEAR settles more than 30 Billion MAD ( 3,67 US Billion) in transactions related with capital and money markets which include equity, corporate bonds, debt instruments issued by Moroccan Banks, and Government Securities, mutual funds. • Maroclear is the unique central Securities depository in Morocco acting as numbering agency for Moroccan securities. • MAROCLEAR is a private limited company with a Board, created under the provisions of Act No. 35-96 of 9 January 1997. Its registered capital is mainly held by the Moroccan State, the main users of its services and some institutional. • The Central Depository is placed under the authority of the Ministry of Finance and under the control of a Government Commissioner and of the Moroccan Securities Ethics Council (CDVM), as stated by Act No. 43-02 of 2 April 2004.

5. 1. maroclear • relationship between the participants in the financial industry • In order to understand the role of MAROCLEAR in the financial industry, it is necessary to observe the relationships between the diverse financial participants in the Moroccan market depicted in the figure bellow : International CSD Bank Al-Maghrib Central Bank National CSD Casablanca stock exchange Issuers Clearing house Derivatives exchange Financial intermediaries Project

6. 1. maroclear • swot analysis • MAROCLEAR had to identify and take advantage of its forces and business opportunities to fulfill it’s objectives. Moreover, it was necessary to identify and avoid external threats with the improvement of strategic operations that reduce their weaknesses. • On one hand, forces and opportunities allow the diversification and deepening in the business. on the other hand, the growth of the institution may be limited by weaknesses and threats. W EAKNESSES S TRENGTHS • The lack of deepening and anticipation in new business lines improvements, could be translated into risks of losing strategic positions in the Financial System. • This weakness is due to a constant increase in transaction volume, the issue of new instruments and emerging needs faced by participants. • The main force of MAROCLEAR is its unique position in the Moroccan financial system. • This position allows the access and a direct relation with all agents, as well as great access of information unlike other intermediaries like stock brokers and negotiation mechanisms. T O PPORTUNITIES HREATS • The emergence of new direct participants, like investment funds, the emergence of Internet as new routing significant opportunities for MAROCLEAR. • Additionally, it is important to mention the Casablanca Financial City a regional financial services hub project. • Increment in the amount of operations beyond the capacity of MAROCLEAR, resulting in the creation of new depositories. • Poor risk management process; incapacity to resume after a disaster leading to lessen the confidence on the MAROCLEAR capacity to handle the business.

7. 1. maroclear • initial information system characteristics • Unique settlement Cycle for all market segments at the end of the day • Routing of instructions • Dedicated network • No paper instructions • input of data • Specific time windows • Exchange trades confirmation, file transfer • Clearing performed by CSE • Brokers-custodians confirmations (T+1  T+2) • Settlement batch on T+3 • Single batch for exchange trades (T+3 settlement) • Cash payment through Central bank • Cash accounts (brokers/custodians) • Client information process using paper • Corporate Actions • Entitlement on operation date • Transfer agent  Custodians Retail Corporate Actions Services Depository services Fees & Billing Business activities Settlement Processing Securities admissions and management Exchange Trades lightening (matching & confirmation)

8. 2. strategy redefinition • The new challenges required a new corporate strategy , that starts with : • Mission redefinition : • Provide safekeeping, custody, clearing and settlement of securities for the financial system, in a scope of high confidence and security. • Satisfy customer needs through, efficiency and high standards of quality in all services. In order to fulfill this mission, MAROCLEAR must lean in a solid financial state, appropriate technology, the adoption and development of the best practices of the industry and human capital. Efficiency Quality

9. 2. strategy redefinition • Vision • MAROCLEAR must develop and anticipate its operations against the growth and extension of the Moroccan Financial System. • It must be regionally recognized as the Central Securities Depository that deliver at reasonable cost the best quality in services. MCL MCL MCL Maroclear Vision

10. 2. strategy redefinition • information system characteristic's • The IT Solution provider chosen is a globally recognized industry leader, with its solutions consistently ranked in top positions by industry experts. He has demonstrated a strong domain expertise in the capital market services industry with strong references within leading CSD in the world. • The Market Infrastructure product suite selected comprises a wide range of solutions that are highly scalable and deployable in a componentized manner. This new plate-form will allow MAROCLEAR supporting new market segments such as Forex, energy and commodities and the growing volumes of the OTC business including specialized CCP services… • The solution acts as a single integrated platform for multiple entities, asset classes and market models. This solution helped MAROCLEAR retain – and hone -- its competitive edge, transform business processes and increase operational efficiency.

11. 2. strategy redefinition • information system characteristic's • The implemented new plate-form helps address Straight-Through-Processing across the capital market infrastructure value chain encompassing exchange trading, exchange settlement (clearing with CCP future evolutions), central depository/registry services, market surveillance, and low technology penetration areas such as Registrars and Transfer Agents (RTA) services. • Feature supported • Multi Currency and Multi Lingual Support • Multi Entity Solution ASP/BSP Ready • State of the Art Technology J2EE, SOA, UML • Support combination of Settlement Models and Payment Methods • Compliant to Global Standards G30, IOSCO, ISO 15022, FIX • Browser based and Mobile Ready Solution • Functional Coverage • Cash and Derivatives, Trading, Clearing and Settlement • Equities, Fixed Income • Futures and Options on Equities, Debt, Index Commodities, Emission • Risk Management • Surveillance • Depository Services • Registrar Services • Shareholder Services • Issuer Services • Value Added Services • Risk Management • SLB, Repo, Pledge • Fees & Billing, Online Reports

12. 2. strategy redefinition • information system characteristic's • Real time settlement for OTC and Repo’s trades • New repo’s module, representing 93 % of the settled volume by March 2012 • Single batch for exchange trades on T+3 • Cash payment through CB • Cash accounts (brokers/custodians) • Dual mode access , Files transfer or input of data • OTC ISO15022 compatible • Routing of instructions • No paper instructions • Specific time windows • Exchange trades confirmation • Exchange members: Transactions looked-in once matched • Clearing performed by CSE • Brokers-custodians confirmations (T+1  T+2) • Settlement batch on T+3 • Corporate Actions • Entitlement on operation date • Transfer agent  Custodians Retail • New model implemented • New more resilient network to sustain the new IT infrastructure Corporate Actions Services Depository services Fees & Billing Value Added Services Business activities Routing of instructions Settlement Processing Securities admissions and management Exchange Trades Allegement(matching & confirmation)

13. 2. strategy redefinition • impact illustration - market participant 2011 survey highlights • The results of our 2011 Client Survey show that, after the implementation of the new platform, our participants are increasingly satisfied with our services; • The response rate to the survey was very high and demonstrate the active support of our market participants • The key results indicate clearly that our services are continually improving, participants treasured the implementation of the real time settlement process for OTC and Repo’s transaction; • Our participants find that we have an in-depth market knowledge over the financial communities; • Highlights : • Reliability– Participant rely on MAROCLEAR to deliver unbreakable (or resilient) services; • Security – MAROCLEAR Platform provides is perceived as highly secured; • Fast to market – key partner in delivering an innovative solutions with focus on shorter-term deliverables; • Open communication – Participant find themselves closely involved in discussions with us on the development of new products and services; • Good progress ... but still more to do : The survey shows we are making good progress but participant are expecting us to sustain the effort and the services improvement initiatives especially implementing Strait trough process – STP interfaces

14. conclusion Help to make post trade infrastructure more simple and reduce cost & risks • Harmonisation : processes, legal & tax rules • Harmonisation of the different standard / interpretation • Efficient interface • Reduce exposure to : • market risk • counter party risk • operational risk • Improve processes • Improverisk management • Implement an adequate IT platform Focus regional integration : Clarify some predictions and obstacle to over come • Legal and regulatory issues, Missing harmonisation • still too much paper work & Manual processes • Vision for the CSD Business in the region to be defined