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Exchange control relaxation on hold

National Treasury, the Sarb and the FSCA ‘reviewing’ circular which broadened how much South Africans could invest offshore.
The exchange control move created confusion in the industry. Image: Shutterstock

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 broadened how much South Africans could invest offshore.

In a joint statement released this morning, they said they were reviewing the circular to provide clarification on the reclassification of inward-listed instruments.

“[They] intend to review Exchange Control Circular 15/2020 issued by the Sarb, following the announcement by the minister of finance in the Medium Term Budget Policy Statement (MTBPS) Speech on October 28, 2020,” it stated.

Offshore 30% cap effectively lifted
Exchange controls: All eyes on the FSCA

They says the review is “limited to providing clarification on the scope of changes to the announcement related to the reclassification of inward-listed instruments.”

This move follows much debate about the significance of their efforts to relax exchange controls, by allowing locally-listed firms to treat their offshore assets as domestic assets, as long as the firms’ assets can be traded on a local exchange and traded in rands.

This relaxation, however, created some confusion around whether Regulation 28 of the Pension Funds Act, which caps investment in foreign assets at 30%, would still be in effect.

Asset managers were divided on the importance of the relaxation, with some saying it was a radical move on the part of the country’s finance authorities, while others downplayed its significance.

Read: ‘Look-through’ not an issue on exchange controls – Wierzycka

The authorities have now acknowledged this confusion, hence their review of the relaxation.

“This follows enquiries by various stakeholders having different interpretations on the extent that the circular affects the foreign investment limits applicable to institutional investors, inter alia, retirement funds, collective investment schemes and insurers.”

In the statement, it says 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 an investment and financial hub for Africa.

It added: “The National Treasury would like to emphasise that the announced reforms to the capital flow management framework do not alter the prudential framework currently applicable to all regulated funds, including retirement funds, collective investment schemes and insurance.”

It said the circular issued on October 29, 2020, dealing with the reclassification of inward-listed instruments was “suspended with immediate effect, to reduce the scope for ambiguity related to compliance with the prudential framework for regulated funds.”

“An amended circular will be issued following a period of public consultations. All approvals granted on the basis of Circular 15/2020 are also suspended.”

The dispensation before Circular 15/2020 remains in existence.

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I think we can thank the Investment Advisors (Magnus & Magda in particular) for highlighting what appears to have been a slip up by a treasury Official probably not realising what they had done !!!

When I read the initial articles I thought to myself that this was too good to be true, because why would the ANC want to allow more foreign investment instead of local? I suspect there will be severe limitations revealed in the “clarification” that will follow, basically rendering reg28 still in full effect.

watch them increase offshore holdings in reg28 funds but add prescribed assets….we give some we take some.

I will not be surprised if there was some serious lobbying by the big institutions as funds will simply leave them in droves to more offshore focussed funds. And they not prepared for this, and once clients leave, they will likely never return after they discovered their high fees and very poor performance.

Can’t see this government ever removing exchange control regulations – if they did the quantity of funds leaving the country would be astronomical

The well to do must have moved their monies out of SA already.

This relaxation will enable the middle class to act on this relaxation; hence the realization by the fat cats at the SARB.

The JSE will take a huge knock; as the UT and ETF’s will be directed outside SA.

It’s a case of “What is good for the country” vs “What is good for the ANC pockets”

Voters need to wake up.

Very good, keep the money in South Africa.

Invest local. Help the local economy.

If you want to invest overseas then perhaps you belong there.

Keep it proudly South African.

Your pension money has not grown in line with inflation over 5 years. If you invested in S&5 500 ETF; your returns would have been over 15%.

When it comes to money; think with your head not your heart.

I’m just tired of seeing the one way minded talk by some people of investing offshore as if that is the only way to invest.

It is not rocket science to invest offshore, but you can lose big money also. Maybe more than in South Africa.

The US market have been at an all time high. Any stock in the US costs easy 10 times more than in SA.

It is just the idea that anyone now selling offshore investments looks like the bright spark kid on the block. Almost as if no thinking is required.


I find your statement very humourous and ironic.

“I’m just tired of seeing the one way minded talk by some people of investing offshore as if that is the only way to invest.”

Are you immune to the one way minded talk in your own comment?

You are actually illustrating through your comment how one sided your train of thought is by basically telling people they should keep their money in South Africa and invest here, no matter what the economy is doing or how the government is ruining the financial wellbeing of South Africa and its people.

It is one thing to support a sports team which you started to support from a young age through tough times because of the couching staff or manager which you didn’t pick. The difference is however, their results or lack thereof do not affect your investments, pension or even your taxes, just your heart.

If you wish to make investment decisions which will affect your pension and future with your heart, then nobody can help you.


You are clearly blind to the ANC and EFF’s steps towards the NDR.

I can only hope for your sake, that your children and their children do not one day ask you what you did to protect all your property (and investments) against the GREAT loot of the next decade…

Since you are so keen on investing in South Africa, keep buying the shares and properties I am selling. I am more than happy taking more and more of my risk offshore.

Many thanks in advance.

Why are we not surprised?

and as we all moan the SA market is up more than 12% in three weeks

End of comments.





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