Nikhil Rathi, CEO, London Stock Exchange (LSE): Interview

Interview: Nikhil Rathi

What benefits can be expected from the agreement signed between the LSE Group (LSEG) and the Casablanca Stock Exchange (CSE) in 2014?

NIKHIL RATHI: A key part of the agreement is to give the CSE access to technologies that provide international investors with a better investment environment and infrastructure. It is also critical to develop education and training programmes, and to this end the development of a financial cluster in Morocco means the improvement of its human capital. Allowing local firms to attract more investors is another area the agreement addresses. It provides access to a network of capital market participants throughout Europe. Our partnership also enhances the CSE’s visibility. London offers very strong infrastructure, with a diversified banking industry and a solid community of lawyers, managers and accountants. From now on, the CSE can leverage this “network effect”. A recent event hosted in London to enhance Morocco’s visibility was very successful, and investors acknowledged Morocco’s strong-performing economy.

The LSE will benefit because Morocco has the ambition of becoming an investment hub in Africa. We believe Morocco opens a window to business opportunities in sub-Saharan Africa, especially in francophone countries. Anglophone Africa has also seen greater connectedness with Morocco within the last few years. This is of interest to us because Africa’s economies are thriving and offer greater investment opportunities than other parts of the world in certain domains.

What sort of lessons might be learned from the development of other financial hubs?

RATHI: Emerging markets can learn a lot from global financial hubs. A strong legal and regulatory framework is of first and foremost importance to building a sound and sustainable financial hub. Emerging markets need to comply with international standards in terms of legal and regulatory frameworks, and disclosure of financial information in order to reassure investors.

Other factors, such as the presence of international companies, the quality of human capital, and better connectivity with other countries and financial markets, are top priorities for emerging financial hubs. What we have seen in Morocco is very encouraging. The ongoing efforts to maintain a strong cluster effect to further attract human capital will make a difference in the long run. The kingdom clearly stands out in the region thanks to its strong institutions, growing wealth and significant economic reforms. Despite slower growth in 2016, the forecast remains very positive.

Which foreign markets has Morocco developed relations with, and which sectors are seen as having the most investment potential?

RATHI: I would pick out several sectors that seem most encouraging. The energy sector in Morocco, and in the region as a whole, offers unparalleled opportunities, since consumption and demand are increasing sharply. International investors could help to raise corporate standards. We also see renewable energy and technology as being very significant. In the wake of the UN conference on climate change, green finance will also become a major contributor to the growth of capital markets.

Morocco has developed a network with the US, China and the EU. Our expertise can help support growth by developing infrastructure and market liquidity through the use of technology and the transfer of know-how. Technological improvements in international trading systems are expected to boost functionality and post-trade services. Meanwhile, education and training programmes should help with the transfer of knowledge going forward.