The South African Reserve Bank published draft rules for a Synthetic Financial Centre on 21 October and asked for public comment by 30 November 2026.
The first phase would let approved institutions manage portfolios of foreign assets from South Africa. National Treasury is driving the plan, which the finance minister announced in the 2026 Budget Speech and which Exchange Control Circular No. 3/2026 mentioned. The Reserve Bank said it expects more investment management work to come to South Africa and the country’s role as an entry point for investment into Africa to grow.
What the draft circular says
According to the draft circular, a Synthetic Financial Centre is set up by regulation and not by geography. Qualifying institutions manage foreign portfolio assets and approved foreign currency activities through a ring-fenced mandate, portfolio, account or arrangement.
Institutional investors licensed by the Financial Sector Conduct Authority or the Prudential Authority, and registered with the Reserve Bank’s Financial Surveillance Department, may qualify. So may private equity fund managers that belong to the South African Venture Capital Association and hold a discretionary licence, South African corporates registered as credit providers that hold a discretionary licence, and authorised dealers. Foreign financial services providers may also apply, but none of them may start work until every licence is in place.
A managing institution would not face a prudential foreign limit on assets it manages for the institutions that originate the money; its own-account exposure still counts. The draft keeps that exposure on the investor’s books, though. Exposure acquired under an approved mandate stays attributable to the investor for whom it is bought, and counts against that investor’s own limit or allowance.
Private individuals may invest through the centre using their foreign capital allowance or single discretionary allowance. South African institutional investors and authorised dealers may invest within their prudential and macro-prudential foreign limits. Non-residents may invest without restriction.
Conditions and limits
Every centre investment must be funded from an approved foreign currency source unless the Financial Surveillance Department says otherwise, and participants must keep a ring-fenced resident foreign currency account with an authorised dealer. The draft excludes South African trusts, corporates and partnerships with no foreign investment capacity, unless they invest through an approved originating institution or the department approves otherwise.
Participants must report quarterly, listing the originating institution, holdings by instrument category and funding sources. The Financial Surveillance Department may amend, suspend or withdraw approval if conditions are breached, if information is materially inaccurate, or if the arrangement is used to circumvent the manual or foreign limits.
The draft says the framework applies only to capital flows. Joining it does not approve any fund or product for sale in South Africa. It also does not replace an approval under the earlier HoldCo or Domestic Treasury Management Company frameworks, which let companies set up holding structures for offshore listings and acquisitions, and manage foreign assets and treasury activity from within the country.
What happens next
Comments go by email to the Financial Surveillance Department, in the format set out in the Reserve Bank’s Annexure B. After 30 November the Reserve Bank will consider the submissions and make revisions where necessary. National Treasury and the Reserve Bank said they will keep talking to industry about implementation.
Other recent finance stories: the medium-term budget outlook and how the repo rate works. The next step for the draft is the 30 November comment deadline.
