Strate, exchange controls and button pressing
I REFER TO the interview – Dual listing, double safe – carried in your 15 February edition and wish to correct an incorrect exchange control impression that might have been conveyed to your readers.
While exchange control in South Africa has been meaningfully relaxed in the past few years, it remains on the statute books with the express stipulation that no more than R2m worth of capital may be removed from the country by an individual without the express permission of the SA Reserve Bank. Your story was clear on this point.
I suspect, though, that your readers may have been misled by my indication that Strate, as the electronic custodian of all JSElisted shares, need do no more than press a button in order to transfer a dual-listed share from the JSE register to the London register. The implication is that a South African investor could thereby transfer limitless sums of money abroad.
Quite clearly, this would be a gross breach of exchange control regulations. However – and I believe that I made it obvious during the course of my interview – such an action is technologically possible but would, of course, be totally in contravention of the exchange control rules.
Strate, as a custodian of shares and a regulator of settlement in the bond and equity markets, is keenly aware of its responsibilities and its duties to abide by all the laws of the land. We would not on any account countenance any breach of any law, or regulation – least of all an exchange control regulation. The dual listing example was solely hypothetical, intended as it was to illustrate one of several advantages of electronic settlement and custodianship.