The Central Bank softens the requirements for “quasi-foreign” securities
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As Kommersant found out, by now the Bank of Russia has accepted for consideration from three CCs the rules of trust management (PDU) of 15 specialized closed-end mutual funds for securities restricted in circulation due to the blocking of NSD’s account with Euroclear and Clearstream. Due to the slow rate of submission of rules, the regulator decided to extend the deadline for admission from September 1 to October 15. Also this week, the Central Bank may publish a letter softening the requirements for “quasi-foreign” securities. This should activate the rules submission process, but does not solve all the problems.
The Central Bank told Kommersant that as of August 10, the regulator received from three CCs for registration of changes in the PDU of 15 existing mutual funds, which, in accordance with the requirements of Law No. 319-FZ, change the type to closed-end mutual funds. From one management company, an application was received for registration of remote control units for four additional closed-end mutual funds. Thus, in a month and a half from the moment when the Criminal Code began to submit the first rules for such funds (see Kommersant on June 28), the number of applications increased by only one, and for the registration of funds it tripled.
Given the low dynamics of the formation of additional funds (ZPIF-A), last Thursday the Central Bank announced the decision of the Board of Directors to extend the deadline for submitting rules for a month and a half, until October 15.
319-FZ regulates the actions of the management companies of an open-ended, exchange-traded or interval mutual fund whose portfolio includes assets whose actual ability to dispose is limited due to the blocking of NSD’s account with Euroclear and Clearstream. If the share of such assets is less than 10%, the management companies have the right to allocate them to closed mutual funds. With a higher share, they are already obliged to either allocate assets to a special closed-end mutual fund, or transform the fund itself into closed-end mutual funds. According to the Central Bank, as of June 27, there were no transactions with 113 mutual funds with assets worth 154 billion rubles.
The fact that this is a completely new procedure, unfamiliar to market participants, prevented more active decision-making on the blocked assets of the management company. “They faced a number of difficulties and additional issues,” stressed NAUFOR President Alexei Timofeev. In the management company “First” they say that they are “working” on the rules of ZPIF-A, but have not yet sent them for registration. “A large volume of blocked assets and a large number of clients that will affect the process of creating a closed-end mutual fund-A require us to work meticulously both on fund documentation and on client communications,” the company’s press service explained.
The Central Bank added that “UK UIFs are faced with the need for an additional assessment of certain types of UIF assets in order to make a decision on classifying them as blocked.” This may include including blocked Eurobonds of Russian companies that are subject to replacement, and shares or depositary receipts of quasi-Russian companies (Yandex, TCS, Ozon, HeadHunter, VK, etc.) as such assets. This, as noted by market participants, can hit hard not only the owners of shares, but the entire market. ““Quai-foreign” securities of Russian companies are very likely to be replaced, but the problem is that this may happen after the date set in the decision of the Board of Directors of the Central Bank for submitting the rules of mutual funds for registration,” notes the head of government relations at Alfa- Capital” Nikolai Shvaikovsky.
The Central Bank said that they plan to provide clarifications on such assets in the near future. “An information letter from the regulator with clarifications should be published next week,” a source in one of the Criminal Code said. The top manager of another management company expects to receive a letter by the end of August, in which, according to him, the Central Bank, in particular, can delegate the right to decide to the management company itself whether to classify “quasi-foreign” securities as blocked or not.
The publication of the letter will spur the management to a more active submission of PDUs for special closed-end mutual funds, but will not become a panacea, since the market still has other questions on the allocation of assets. There are still many stumbling blocks, says Alexander Yeremeev, director of the investment products department at TKB Investment Partners, in the first place, they did not agree on the valuation of assets, from there “there are questions about the redemption of shares, and remuneration, etc.”
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