Regulatory Alerts2022-03-18
FSCA Communication 8 of 2022 (RF)
The Financial Sector Conduct Authority issued Communication 8 of 2022 to update retirement funds on revised Regulation 28 foreign portfolio investment limits. Aligning with the South African Reserve Bank Exchange Control Circular 10/2022, funds may now allocate up to a single 45 percent of their assets to foreign investments. Fund boards must review and adjust their investment policies and mandates accordingly to comply with the expanded allowance.
1 FSCA COMMUNICATION 8 OF 2022 (RF) Regulation 28: Increased foreign portfolio investment limits
- Purpose The purpose of this communication is to inform the retirement funds industry of the allowable increase in foreign portfolio investment limits.
- Background On 23 February 2022, following the 2022 Budget announcement by the Minister of Finance, the South African Reserve Bank (“SARB”) has issued Exchange Control Circular No. 10/2022, indicating that the foreign investment limits have been revised upward.
- Allowance Increase 3.1 Regulation28(3)(i) states that the aggregate exposure to foreign assets must not exceed the maximum allowable amount that a fund may invest in foreign assets as determined by the SARB, or such other amount as may be prescribed. Based on the SARB’s Exchange Control Circular No.10/2022, retirement funds may therefore now acquire foreign exposure up to the revised single limit of 45% in respect of foreign portfolio investments.1 3.2 Where necessary, the Board of the fund may revise their investment policies and mandates in accordance with the principles contained in Regulation 28.
- Enquiries For more information regarding this Communication contact the FSCA by emailing Ms Wilma Mokupo at Wilma.Mokupo@fsca.co.za. OB MAKHUBELA DIVISIONAL EXECUTIVE: RETIREMENT FUNDS SUPERVISION Date of publication: 18 March 2022 1 Regulations means the Regulations made under section 36 of the Pension Funds Act, 1956 (Act No. 24 of 1956).
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