“The 2020 version brings new liberalization and easing measures both in current transactions and in capital transactions. The text thus reflected the irreversible guidelines that exchange regulations are experiencing in terms of consolidating the convertibility regime and simplifying the provisions ”

This is how the Exchange Office presents the new General Instruction for Foreign Exchange Operations dated January 1, 2020 (IGOC 2020).

Possible variability?

However, it seems that in at least one area, the texts of IGOC 2020 contradict each other: they speak of “liberalization and relaxation” in the presentation of IGOC 2020, while the very letter of certain provisions of this instruction shows a hardening, a narrowing of the previous regime applicable to certain operations yet essential to the competitiveness of the Kingdom.

This is the case with article 142 which, in its 2020 version, far from liberalizing or making more flexible, stiffens the regulatory regime for financial hedging transactions. Worse still, IGOC 2020 seems to be repealing the liberalization initiated by IGOC 2019 Until the entry into force of IGOC 2019, the question of whether claims under hedging contracts (swaps, options, forwards ) could be settled by way of compensation was, according to the boldest, open and, according to the most prudent, closed, while the Exchange Office did not take an official position.

The former considered that, with the Exchange Office referring to ISDA or FBF framework contracts, offsetting was allowed on the grounds that this mode of extinguishing debts was one of the reasons for these contracts.

The second argued that compensation being, in principle (Article 9), prohibited, hedging contracts could not, unless authorized by the Exchange Office, benefit from it. Authorization, on the validity of which we will question in a future article.

In 2019, the Exchange Office wisely decided to put an end to this debate by adding a last paragraph to article 142 of the IGOC which provided: “The hedging operations subscribed in accordance with article 140 of this Instruction may give rise to compensation for positions arising from these operations. ”

Incomprehensible backtracking

In 2020, this paragraph setting out the freedom to compensate disappeared from Article 142 of the IGOC, without any explanation being given by the Office. Should we therefore consider that financial futures contracts are now deprived of clearing? Unfortunately, we think so for two reasons: first, the prohibition of the principle of compensation remains in Article 9 of the IGOC; secondly, because the IGOC expressly provides for the benefit of compensation in favor of other sectors: transport, telecommunications, insurance and even basic product coverages (Article 143).

There are three reasons to regret this incomprehensible backlash on the part of an authority, the Exchange Office, where, however, expertise is not lacking.

First, in terms of method, this deletion is reprehensible: it has not been explained, not even announced.

Secondly, since compensation is a payment method that reduces credit risk, its removal increases the cost of operations and it is Moroccan operators who will pay for it.

Finally, this regulatory regression neither reflects nor supports, to say the least, the ambition expressed, at the highest level of the State, to erect the Kingdom as an international financial center: the “transformation of Casablanca as an international financial hub […] requires […] the establishment of an appropriate legal framework […] (1). “Provisions such as Article 142 of IGOC 2020, far from contributing to” the establishment of an appropriate legal framework “, serve to repel the benefit of Morocco’s competing countries.

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