In the statement made by the regulator, it was stated that the Central Bank has limited trading in foreign securities and stock markets that have been blocked by international depository institutions since May 30. The statement did not specify what kind of papers were in question. As the Central Bank announced, the decision aims to protect investors and minimize their risks.
“Currently blocked foreign securities, St. A small amount is in circulation on the St. Petersburg Stock Exchange. As such assets are not marked in the trading and clearing system, they will be distributed equally between trading participants and their clients, taking into account proportionality and excluding non-trading accounts of small client portfolios.” said Russia.
As stated by the Central Bank, despite the measures it has taken, the owners’ property rights on such foreign securities remain. “Organized trade in them will continue as before, as restrictions are lifted. At the same time, their owners will have the opportunity to dispose of the income on paper, which is now difficult due to the activities of international depository institutions, “he said.
Central Bank and St. Petersburg Exchange did not respond to socialbites.ca’s request.
What does the Central Bank’s restriction mean?
According to economist Tatyana Kulikova, private investors will no longer be able to sell and buy certain foreign stocks and bonds on the stock market.
“This is done to protect investors. “The central bank is probably afraid that the West may to some extent confiscate or cancel the assets of Russian investors, so it took this step,” he said.
Dmitry Lesnov, Head of Finam’s Customer Service Development Department, agrees.
“The main purpose of this decision is to protect investors, because the chain between the National Settlement Deposit – NSD, international depositor Euroclear and Best Efforts Bank has been broken. “Our estimates are that this will affect a small fraction of investors – about 12-15%,” he said.
Otkritie Investments Deputy Managing Director Andrey Salashchenko said that the restriction was actually in St. Petersburg Stock Exchange compelled all participants with foreign securities in their accounts to conclude that the securities are still blocked.
This requirement may affect many customers, as in the proportional distribution condition a certain portion of their securities will be blocked for sale.”
Why it is necessary
This measure allows the Bank of Russia to ensure that not every customer purchasing foreign paper today will end up in a situation where their assets will be partially blocked.
“In fact, we are currently talking about fixing a certain status quo so that each client clearly understands which part of their securities is blocked for accounting on NSD and which are free from any restrictions,” said Salashchenko.
Aleksey Timofeev, Chairman of the National Association of Stockbrokers, pointed out that the Central Bank’s order is directed at brokers who must block shares of securities blocked in Euroclear.
“At the same time, such blocking will usually be carried out proportionally among customers holding such securities,” the expert said.
What are the consequences of the action?
Pavel Mitrofanov, Managing Director of Expert Business Solutions, stated that investors can no longer do anything with their securities blocked by Euroclear international depository institutions.
“Technically, trading is done with very small volumes of securities. In fact, the Central Bank creates equal conditions for investors. When the circumstances are unequal, for example, someone wants to sue. Therefore, a regulation was needed. It will help avoid conflicts when sanctions are lifted, ”says Mitrofanov.
According to Lesnov, the trading volume on the exchange will decrease due to the decision of the regulator.
“Trade volume will definitely fall. On the other hand, this will provide more protection for investors against force majeure situations that may hypothetically develop in the future. And to some extent, this will cool the interest of potential customers who might invest in foreign stocks – they will now consider using this particular tool for fund investment. “This will likely lead to a greater focus on Russian issuers and ultimately the beneficiaries of this decision will be Russian companies,” he said.
According to Timofeev, St. The consequences of the restriction are likely to be minor, as it does not affect most securities traded on the St. Petersburg Stock Exchange.
“Although the measure limits the ability of holders of such securities to transact with them for the time being, it does not deprive them of their ownership,” said Timofeev.
Source: Gazeta
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