Receipts are moving away from blocking – Newspaper Kommersant No. 69 (7514) dated 04/20/2023
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SPB-Bank offered professional participants to transfer quasi-Russian securities from non-trading accounts to trading ones. However, in this case, the broker will lose the opportunity to unlock these assets in Euroclear. Market participants believe that in this way SPB Exchange can increase the liquidity of trading, and given the expected re-domiciliation of these issuers, such a transfer looks the most attractive for investors.
On Wednesday, April 19, SPB-bank (the settlement depository of the SPB Exchange) sent an information letter to professional participants in the securities market (Kommersant read it), in which it announced plans to transfer quasi-Russian securities from the non-trading section of depo sub-accounts to trading. If a professional participant wants to retain the possibility of unlocking securities that have a final storage location in Euroclear, he needs to send a refusal to such a transfer to SPB-bank. These actions relate to securities both currently traded on the stock exchange (Cian, Fix Price, HeadHunter, Ozon, X5, TCS Group, Yandex) and those with which operations are not carried out (Noventiq, VK Company, Globaltrans Investment and Etalon Group ). The receipt of the letter was confirmed in four companies, in particular, in Digit Broker and Ivolga Capital.
Lawyers note the technical nature of such actions: in particular, they are talking about trading foreign securities on the St. Petersburg Exchange through the “working” chain of depositories.
According to one of Kommersant’s interlocutors, in fact, restrictions are being lifted within the framework of the Russian Federation, but restrictions remain on the transfer of securities abroad. To obtain permission to withdraw them from the Russian Federation, you need to obtain a license from the Belgian authorities, for this they must remain on non-trading accounts, he notes. In addition, Ekaterina Makeeva, partner and head of sanctions practice at AB A-PRO, recalled that the Central Bank extended until October 1 the period of restrictions on the circulation of a number of blocked securities, in respect of which Russian depositories must keep separate records on non-trading accounts, explaining that these restrictions are not relate to securities of foreign issuers carrying out their main activities in the territory of Russia.
Philip Gabunia, Deputy Chairman of the Central Bank of the Russian Federationon the presence of asset release cases in Euroclear and Clearstream, March 23:
“If within the framework of the mass licenses that have been filed, then no. I don’t have such information about large participants.”
Nevertheless, professional participants expect an increase in the liquidity of such securities. The transfer is being made to enable investors to fully trade their securities and raise liquidity, says Dmitry Alexandrov, managing director of Ivolga Capital. According to him, as a result of the transfer, the investor is likely to lose the opportunity to seek unblocking in Euroclear. The main purpose of the transfer is to increase the liquidity of the listed securities and the turnover of transactions on them, Anna Avakimyan, chief analyst at RegBlock, added. She also did not rule out the overflow of investors’ funds from the securities of first-tier issuers to the listed assets.
Perhaps this is done in order to simply rearrange the blocked securities in NSD and thereby give an opportunity to exit impatient and sensibly assessing the chances of unlocking assets to investors, who are now 50:50, a Kommersant source in the management company noted. “For the St. Petersburg Exchange, the plus is in expanding the list of traded securities,” he added.
SPB Exchange did not disclose the volume of trading in quasi-Russian shares, refusing to comment. However, judging by the website of the trading floor on April 19, by 19:00, deals were made with securities of six issuers, and their volume amounted to $0.24 million (less than 0.5% of the total volume of trades in foreign shares denominated in dollars). However, trading in depositary receipts on the Moscow Exchange also occupies an insignificant share. This week it was about 3% of the volume of trading in equity securities.
At the same time, market participants consider the risks of such a transfer close to zero, since, explains Galina Karyakina, COO of Tsifra Broker, “all these papers will be turned over into Russian papers.” “Given the low probability of unblocking in Euroclear and the possible re-domiciliation of such quasi-Russian issuers, the option of transferring to trading accounts seems to be preferable for investors,” Mr. Alexandrov also notes.
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