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The National Treasury, the South African Reserve Bank (Sarb) and the Financial Sector Conduct Authority (FSCA) are in effect withdrawing a circular on exchange controls, which expanded the number of South Africans who could invest abroad.
In a joint statement released this morning, they said they were reviewing the circular to provide clarification on the reclassification of publicly traded instruments.
“[They] They intend to review the Exchange Control Circular 15/2020 issued by the Sarb, after the announcement of the Minister of Finance in the Speech of the Medium-Term Budget Policy Statement (MTBPS) of October 28, 2020 ”, he indicated.
Read:
30% offshore limit effectively lifted
Exchange controls: all eyes on the FSCA
They state that the review is “limited to providing clarification on the scope of the announcement changes related to the reclassification of publicly traded instruments.”
This move follows a great debate about the importance of its efforts to relax exchange controls, by allowing publicly traded companies to treat their offshore assets as domestic assets, provided that the companies’ assets can be traded on an exchange. local and in rands.
However, this relaxation created some confusion about whether Regulation 28 of the Pension Fund Law, which limits investment in foreign assets to 30%, would still be in force.
Asset managers were divided on the importance of the relaxation, with some saying it was a radical move by the country’s financial authorities, while others downplayed its importance.
Read: ‘Look-through’ is not a problem on exchange controls – Wierzycka
Authorities have now recognized this confusion, hence their review of the relaxation.
“This follows consultations from various stakeholders who have different interpretations of the extent to which the circular affects the foreign investment limits applicable to institutional investors, including retirement funds, collective investment schemes and insurers.”
In the statement, he says that the MTBPS announcement aims to create an enabling environment that makes it easier for foreign investors to invest in South Africa and support the country’s growth as a financial and investment hub for Africa.
He added: “The National Treasury would like to emphasize that the reforms announced to the capital flow management framework do not alter the prudential framework currently applicable to all regulated funds, including retirement funds, collective investment plans and insurance.”
He said that the circular issued on October 29, 2020, which deals with the reclassification of instruments listed on the stock exchange, was “suspended with immediate effect, to reduce the scope of ambiguity related to compliance with the prudential framework for regulated funds.” .
“An amended circular will be published after a period of public consultation. All approvals granted based on Circular 15/2020 are also suspended ”.
The dispensation prior to Circular 15/2020 remains in force.
