Shares are being moved away from sanctions

SPB Exchange plans to transfer shares from those blocked as a result of sanctions – with a listing on the Hong Kong Stock Exchange (HSE) – to a third-party Russian depository. Lawyers believe that such an action is technically possible, but does not solve the problems of blocking trading: in particular, it will require obtaining an OFAC license. And even this license will not remove the threat of possible secondary sanctions.

The St. Petersburg Exchange is developing a mechanism for unlocking foreign securities listed on the HSE, two market sources told Kommersant. Both sources said that the securities are planned to be transferred from the exchange depository (SPB-Bank) to a new storage location. According to one of Kommersant’s interlocutors, the transfer can be made to the depository of the investment company SAV Capital. Kommersant’s interlocutors do not know when the transfer of assets can begin.

As stated in St. Petersburg Bank, it is carrying out systematic work “to unlock assets, including negotiations with counterparties from friendly jurisdictions.” At the same time, they note that “unlocking the securities will not be possible without the permission of counterparties – accounting organizations – to transfer assets from St. Petersburg Bank.” However, at the moment, “there is no such permission, so it is impossible to talk about any decisions made or agreed upon mechanisms.” SAV Capital did not respond to Kommersant’s request.

According to public data, the HSE depository, CCASS Depository, participated in the system of depositary accounting of rights to Hong Kong shares, and the final custodian of the securities that participated in the trading of the St. Petersburg Exchange was its settlement depositary, St. Petersburg Bank, notes Forward Legal lawyer Oles Gruzdev. However, he points out that it is not clear whether there were intermediate links in the chain of registration of rights (storage of papers). The transfer of securities from the St. Petersburg Exchange to the intended depositary of the investment company SAV Capital is technically possible in the Russian circuit, says Roman Khaminsky, partner of the BKHK law firm. As Arikapital investment strategist Sergei Suverov points out, since Hong Kong securities are accounted for through friendly depository chains, “it is possible that SPB Bank’s counterparties for such assets allow the possibility of transferring these securities” from the depository.

At the same time, transferring to another Russian depository will not solve the existing problem, lawyers say. According to Roman Khaminsky, the key point for a positive result is the receipt by the St. Petersburg Exchange of a license from OFAC to carry out such a transfer of securities. But even if a license is obtained, given the many bureaucratic nuances of transferring assets, questions may arise regarding the details of the license, because the HSE interacts with a large number of financial institutions and licensed investment organizations in the domestic and foreign markets and will not want to jeopardize itself and its counterparties , he thinks. If we are talking about the interests of Hong Kong companies whose shares are listed on the St. Petersburg Exchange, then the participation of their shares in trading on the Russian platform also entails for them the risks of secondary US sanctions, Mr. Gruzdev believes.

The St. Petersburg Exchange may try to transfer assets to the Hong Kong Stock Exchange, but in this case the local service provider is unlikely to work with them, and the agent company risks being blacklisted because it provides services to a sanctioned company, says Capital Lab partner Evgeniy Shatov. Based on the specifics of the depository and its small current scale, the volume of transferred assets at the first stage is unlikely to exceed 2 billion rubles, but rather will be lower than this value, estimates independent financial analyst Andrei Barkhota.

It is too early to talk about unambiguous effectiveness in solving unlocking problems. However, according to Mr. Barhota, such an assignment of assets could be useful for the St. Petersburg Exchange, which frees its balance sheet from quasi-receivables. However, Dmitry Lesnov, head of the client service development department of Finam Financial Group, has not heard any positive news from representatives of the St. Petersburg Exchange that OFAC has given any permission to Hong Kong issuers, either to the exchange itself or to its counterparties through which trading in these assets was organized.

Ksenia Kulikova