Clearstream suspends conversion of Russian stock receipts due to new package of sanctions

Clearstream Banking announced the suspension of the execution of instructions for the conversion of depositary receipts into Russian shares. This is mentioned on site Clearstream. The decision is related to changes in the EU sanctions regime against Russia dated June 23.

The National Settlement Depository (NSD; part of the Moscow Exchange Group) has extended the exemption from paying fees for the conversion of depositary receipts until December 30, 2023. The zeroing of the tariff allowed European settlement and clearing systems to conduct transactions with the sanctioned NSD. Such a mechanism did not violate the sanctions, since NSD did not benefit from the conversion of securities.

However, on June 23, the EU changed Art. 5a of EU Sanctions Regulation 269/2014. The competent authorities of the EU member states were given the right to authorize the conversion of depository receipts into Russian securities held by NSD. Applications must be submitted by September 25th.

Clearstream Banking consulted and decided to interpret the new amendment as a prohibition on converting without the permission of the competent authorities. Clearstream’s announcement notes that “all Russian securities are ultimately held by NSD as the issuer’s central depository.”

The conversion of Russian depositary receipts will be suspended until the competent authorities explain the practical steps to obtain permission to convert them. “Prior to instructions, Clearstream Banking cannot process instructions to convert or cancel positions in depository receipts with Russian underlying securities,” Clearstream said in a statement.

Anastasia Larina