Exchange Control Circular No. 17/2020

Circular Reference: Exchange Control Circular No. 17/2020

Circular Date: 24 November 2020

Circular Status: Pending

Statement on exchange control

The attention of Authorised Dealers in foreign exchange is drawn to the attached media statement (see Annexure A) advising that it is the intention of National Treasury, the South African Reserve Bank and the Financial Sector Conduct Authority to review Exchange Control Circular 15/2020 dated 2020-10-29 (see Annexure B) to provide clarification on the scope of changes to the announcement related to the reclassification of inward listed instruments.

Taking cognisance of the above, Exchange Control Circular 15/2020 is hereby suspended with immediate effect. All approvals granted on the basis of Circular 15/2020 are also suspended. The dispensation before Circular 15/2020 remains extant and in this regard kindly refer to Annexure C attached for the policy on inward listings.

Stakeholders and the public are invited to submit comments to sarbportfolio@resbank.co.za by 2020-12-15 on proposals to amend the circular in question. Input is also required on the selling of a derivative or exchange traded fund (ETF) where the underlying foreign asset is issued by a company not listed on a South African exchange as well as on the selling of an inward listed derivative or ETF where the underlying foreign asset is not listed on a South African exchange.

An updated circular in amplification of the foregoing will be issued in due course.

Head of Department: Financial Surveillance

MEDIA STATEMENT
Capital flow management framework update: Clarification of reclassification of inward listed instruments
National Treasury, the South African Reserve Bank (SARB) and the Financial Sector Conduct Authority (FSCA) 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 28 October 2020.
The review is limited to providing clarification on the scope of changes to the announcement related to the reclassification of inward listed instruments. 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.
The MTBPS announcement aims to create an enabling environment that makes it easier for foreign investors to invest in South Africa, and support South Africa’s growth as an investment and financial hub for Africa. The National Treasury would like to emphasize 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.
The Circular issued on 29 October 2020 dealing with the reclassification of inward listed instruments is therefore 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 extant.
Stakeholders and the public are invited to submit comments to sarbportfolio@resbank.co.za by 15 December 2020 on proposals to amend the Circular in question. Input is also required on the selling of a derivative or ETF where the underlying foreign asset is issued by a company not listed on a South African exchange.
Date: 24 November 2020
Issued by the National Treasury, the South African Reserve Bank and the Financial Sector Conduct Authority
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