Mutual Funds’ Order Routing Platform 25th AMEDA Conference 10-13 April 2018, Kasane Ridouane AZAGROUZE Chief Information Officer azagrouze@maroclear.com

SUMMARY 1 Introduction 2 Background 3 New mechanism 4 Functional Architecture 5 Cut off time 6 Settlement process Restricted usage

Mutual Funds SICAV ET FCP? 1. Introduction Mutual Funds Mutual funds are portfolios of securities managed by professionals and held collectively (in the form of units or shares) by large public or institutional investors. There are two major legal types of mutual funds: SICAV (Variable Capital Investment Company) and FCP (corporate mutual funds). There is no difference in their mode of operation, only their legal nature is different. SICAV ET FCP? SICAV are constituted for the management of a portfolio of securities and cash, which issues shares and subscription . Thus, any investor who buys its shares becomes a shareholder. The Fund is a joint ownership of securities and cash, whose units are issued and redeemed at any time at the request of any subscriber or Unitholder. But It does not give any rights to shareholders. Restricted usage

Mutual Funds capitalization 40 Billions USD 1. Introduction Capital Market Capitalization 173 Billions USD and GDP 110 Billions USD Mutual Funds capitalization 40 Billions USD Restricted usage

2. Background and context Main actors of mutual funds Investor The investor is the person or entity that allocates capital with the expectation of a financial return. The investor attributes the Power of Attorney to the Distributor who deals on his behalf. The distributor is an agent between two parties (the AMC and the investor) but acts on behalf of the investor. He provides fund information to potential investors, accepts orders on behalf of a fund and implements order transfer as well as flow of information between the fund, the investors and their intermediaries. Distributor Asset Management Company The AMC invests its clients’ pooled funds into securities that match its declared financial objectives. Asset Management Companies provide investors with more diversification and investing options than they would have by themselves. Transfer Agent The transfer agent is responsible of the compliance of the fund’s investment policy and the calculation of the NAV by the AMC. Depository Participant The depository participant ensures the settlement/delivery and custody of fund assets. He maintains custody of fund assets, keeps up-to-date security and cash accounts, receives settlement/delivery orders and executes them in conjunction with Maroclear. CSD is responsible of routing the orders, performs control over the information that it receives in the orders by referring to the Fund Database and ensures the settlement. CSD Restricted usage

Distributor of Mutual Funds Client Depository Participant 2. Background and context Description of the current mechanism Private investor Account Agreement Subscription/Redemption/Switch Orders  Orders Distributor of Mutual Funds Banks, Asset Management Company, insurance company… AMC Create & Issuer of Mutual Funds Calculation of the NAV Distribution Agreement Confirmation Notification of the subscription / Redemption orders Contract Subscription/Redemption/Switch Orders NAV Contract Transfer Agent Verifying the regularity of the Fund Verifying calculation of the NAV by the AMC. Client Depository Participant Routing of the order Delivery versus payment Notification of the subscription /Redemption orders Confirmation & NAV Instruction to sell or buy Instruction to sell or buy CSD Central Bank Restricted usage

! 2. Background and context Description of the current mechanism Distributor A AMC A Gestionnaire A ! Distributor B Depository Participant 1 Transfer Agent 1 AMC B Gestionnaire B Distributor C AMC C Gestionnaire C Distributor D AMC D Gestionnaire D Distributor E Depository Participant 2 Transfer Agent 2 AMC E Gestionnaire E Distributor F Gestionnaire F AMC F Distributor G AMC G Gestionnaire G Distributor H Depository Participant 3 Transfer Agent 3 AMC H Gestionnaire H CSD Distributor I AMC I Central Bank Restricted usage

Order routing platform new mechanism THE NEW PROCESS Distributor A AMC A Client DepositoryParticipant 1 Order routing platform Transfert / Agent 1 Distributor B AMC B Distributor C AMC C Fund selection Distributor D AMC D Identification of the distributor Private investor Client Depository Participant 2 Transfert / Agent 2 Distributor E AMC E Routing of the order Distributor F AMC F Settlement Distributor G AMC G Client Depository Participant 3 Transfert / Agent 3 AMC H Distributor H AMC I Distributor I Central Bank Restricted usage

CLEARFUND new mechanism ADVANTAGES Reducing back office costs A secured, standardized and harmonized process CLEARFUND Visibility of Funds across the market Single point of access to all funds Operational management and facility of distribution of funds Reducing operational risk and errors An automated process: from the order routing to settlement finality Restricted usage

MF Order Routing and Execution Reference Data and Administration 4. Architecture of the Platform Distributor AMC Transfert agent Depository Participant CFT SWIFT Network HTTP/HTTPS Email Mutual Funds MF Order Routing and Execution Corporate Actions Reports Trade Management NAV Management Statement of Holdings Order Creation Order Modification Name change ISIN Change NAV Capture Corporate Actions Order Acceptance Order Confirmation Merger Stock Split NAV Validation Transaction Liquidation Reverse Stock Split Order Rejection Order Cancellation Cash Movement Order Monitoring Settlement Cut Off Time Management Fees & Billings Static Data Reference Data and Administration Business Relations Calendar Instruments Parameters User Administration Accounts Restricted usage

4. Architecture of the Platform Reference Data The Reference Data component contains all information that fund manager should provide on their investment funds in order to facilitate their routing. The information covered includes ISIN code, contact details, subscription/redemption rules, settlement details, cut off times, etc. Trade Management The ‘Order Management’ feature is related to order routing and execution. The Order Routing service enables order issuers to purchase their funds and the order handling agents to process those orders within a centralized environment. Position Management Position management feature is related to the balancing of the amount of securities held by a participant. This feature is used to reconcile the balances between CSD and the transfer agents. Net Asset Value (NAV) The NAV is the mutual fund’s price per share/part. The calculation is carried out by the AMCs and/or the Transfer Agents, and is fed to the platform in order to be transmitted to the order issuers through the confirmations. Settlement CSD automatically settles orders that are processed. The settlement can be Free of Payment or Versus Payment. Fees and Billings The order routing, management and execution service (CLEARFUND) is a payable service. Business Relations Each participant has its own role within the platform, in addition to the major categories. Restricted usage

Non- prevalidated order 4. Architecture of the platform Order types There are two order types on the platform : Prevalidated order The Transfer Agent and the client DP belong to the same entity. In this case, the authorization of the client DP is not needed for the validation of the order by the Transfer Agent. Only the validation of the asset management company remains mandatory. Non- prevalidated order The Transfer Agent and the client DP do not belong to the same entity. In this case, both the validation of the asset management company and of the Client DP are mandatory. Restricted usage

4. Architecture of the platform Flow description Order Distributor Order Status Status Status Confirmation Create order and confirmation of the order status in CLEARFUND, Update status Update status Transfert order Transfer the order to the Asset Management Company and to the Transfer Agent for confirmation of the order status. Create order Transfert order NAV validation Confirmation validation Transmission order (once accepted by the asset management company) to the Client Depository Partner for verification. Confirmation of the order status to the distributor, the asset company management and the transfer agent. validation Clearfund Order Status Status Confirmation AMC Order Processing NAV Calculation NAV Introduction by the asset management company and the Transfer agent. The system use only AMC NAV for Order computation and settlement. After the NAV validation, the order can not be modifies nor canceled. Transfer order for provisions verification Status Status Client DP Control Order NAV calculation Transfer Agent Restricted usage

The cut-off time definition depends on : AND 5. Cut off times AMC The cut-off time definition depends on : AND Fund type Cut off time subscription/ redemption Periode of subscription/ redemption h1 D 9h Accepted orders Orders are not accepted until the next possible date Restricted usage

Distributor is the Client custodian or the AMC 5. Cut off times of orders Prevalidated orders Cut off time subscription/ redemption Deemed confirmed by AMC Deemed confirmed by client Custodian orders h1 h2 h3 h4 EOD Validation of the NAV and confirmation of the orders Client DP refusal AMC refusal Creation of settlement instructions Distributor is the Client custodian or the AMC Restricted usage

Non prevalidated orders Client custodian confirmation/refusal 5. Cut off times Non prevalidated orders Cut off time subscription/ redemption Reception Of orders 9h h1 h2 h3 h4 EOD Validation of the NAV & confirmation of the orders AMC confirmation/refusal Client custodian confirmation/refusal Creation of settlement instructions Restricted usage

Delivery /versus payment Instructions 6. Settlement process Order confirmation are sent to the concerned parties after validation of the NAV on CLEARFUND; After confirmation, two settlement instructions are sent from CLEARFUND to the settlement platform; The instructions are processed in the settlement platform; The settlement confirmations instruction are generated and sent to the to the concerned; The officials are informed of each change affecting the status of their orders; If the Transfer Agent and the Client Depositary Partner belong to the same entity, the generated instructions are a “Free of payment" Otherwise, the generated instructions are “Delivery / versus payment”. At EOD, the Issuer Nostro is updated (+/-). Confirmation Confirmation Client DP Transfer Agent Settlement System Confirmation of settlement Confirmation of settlement Instruction Status Instruction Status Delivery /versus payment Instructions Central Bank Restricted usage

Questions? Route d'El Jadida - 18 Cité Laïa - Casablanca 20200 - Maroc Tél.: + 212 522 239 000 - Fax : + 212 522 994 464 mbox@maroclear.com - www.maroclear.com Restricted usage : This material can be used only by AMEDA members for reference. Partial or complete copy is prohibited without the approval of MAROCLEAR.