During his tenure as head of the African Stock Exchanges Association (ASEA), Karim Hajji, General Manager of the Casablanca Stock Exchange, wants to lead the integration project of the Johannesburg, Lagos, Nairobi markets, Casablanca, Mauritius, Abidjan and Cairo.
Like African economies, there are very few links between financial markets. The project of interconnections between these different places will help to correct this weak point. Above all, it will improve market liquidity, one of the black spots today. Together, the stock markets in question account for over $ 1 trillion in capitalization, including $ 871 billion for South Africa alone.
For the implementation of the connectivity project, it will be necessary to remove certain barriers or to circumvent them. Each market with its own rules and an attempt at harmonization will need to deal with issues that fall under the prerogatives of the states. It is a heavy and complex yard.
To overcome this constraint, market managers will opt for a sponsored access for brokers. A broker in one of the seven countries may trade securities in other markets through local brokers.
“It’s the simplest model that allows you to go fast and makes everyone safe,” says Karim Hajji. There will be no limit for brokers who can intervene on the markets as well as the values on which they can invest. An association of brokers from member countries is being created.
On the technological side, a fixed protocol for connecting the seven exchanges to each other has been retained. This solution overcomes the complexity of setting up a single information system.
Supported by the African Development Bank (AfDB), the Interconnection Project has received $ 980,000 in funding from AfDB-led Africa-Africa Economic Cooperation. A project manager office is being recruited. “We have identified a candidate and are in the process of validating it with the AfDB,” says the president of ASEA. The main task of the project manager will be to operationalize the project by opening the dialogue with the brokers, the depositories …
The first transactions under the interconnection project are expected in the first half of 2020. The operationalization in Morocco is dependent on the evolution of the exchange regulations. Insurance companies have the possibility to invest 5% of their capital and UCITS 10% of net assets abroad, but mainly in OECD and AMU countries. It will therefore be necessary to widen their scope of intervention to the countries participating in the interconnection project. The Exchange Office has delegated to the AMMC and Acaps the choice of countries in which institutional investors are authorized to intervene.