Management companies have not submitted documents to all closed-end mutual funds with blocked foreign assets
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The deadline for management companies to submit rules for closed-end mutual funds for the allocation of blocked foreign assets from market funds has expired. According to the Central Bank, out of more than 80 mutual funds that should be affected by the separation, rules have been submitted for only 60 funds. Latecomers will receive instructions from the regulator and correction of violations in a short time. At the same time, companies still have questions, including the valuation and sale price of distressed assets.
The deadline for submitting changes to the trust management rules (TMR) for mutual funds with blocked foreign securities for registration expired on October 15. Depending on the share of such assets in the fund’s portfolio, management companies had to either convert it into a closed-end mutual fund, or allocate assets (if their share did not exceed 10%) into a new closed-end mutual fund.
In general, according to the Central Bank data presented last week, the rules have been filed for 60 out of more than 80 eligible funds with a total net asset value (NAV) of over 120 billion rubles. At the NAUFOR conference in Yekaterinburg on October 12, the head of the regulatory department of the department of investment financial intermediaries of the Central Bank, Valery Krasinsky, noted that, according to preliminary data, out of 19 management companies that had funds with blocked assets, 13 companies submitted documents for registration. “Companies that did not submit the rules on time will most likely receive an order from the Central Bank to eliminate the violation, which will be given two weeks,” notes a Kommersant source in the market.
A survey by Kommersant conducted among the largest management companies indicates that all of them submitted full requirements for funds with blocked assets to register new funds or re-register old funds. Alfa Capital explained that the rules of 15 funds were sent to the Central Bank, of which 13 mutual funds are subject to re-registration. RSHB Asset Management announced the direction of 17 PDUs. The Pervaya Management Company stated that out of 21 funds for which such actions are necessary, in 10 cases assets are separated, and the rest are converted.
Alfa Capital said that for 13 funds that will be transformed into closed-end mutual fund-A, the Central Bank has already completed the registration of rules. “Changing the type of fund did not require any action from clients; everyone continued to own the same number of shares as before,” notes Nikolai Shvaikovsky, head of government relations at the company. The remaining management companies surveyed say that the PDUs of the submitted funds have not yet been registered. “The procedure for registering changes can take from one to two months,” says Alexander Prisyazhnyuk, director of the investment department of RSHB Asset Management.
Despite the final stage of allocating blocked assets, managers still have questions about working with them. In particular, there is no clear understanding of the marketability criteria for the sale price in relation to blocked assets. According to the general director of TKB Investment Partners, Dmitry Timofeev, the main problem is the redemption of shares when selling assets. The management company must pay shareholders at least 90% of the proceeds from the sale of assets for the billing period if the payment amount is more than 10% of the NAV.
Market participants also have questions regarding the assessment of blocked assets when calculating the NAV of funds. In September, the NAUFOR board of directors approved a methodology according to which the assessment will be carried out either by requesting a price from a broker or an assessment from an independent appraiser. “Such pricing will be quite creative, because different brokers and appraisers can set different benchmarks,” notes Oleg Goransky, director of legal issues at Pervaya Management Company. “As a result, the same securities in different companies can be valued differently.”
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