European cos banned from participating in exchange of frozen assets with Russian investors - EC
MOSCOW. July 25 (Interfax) - Companies and individuals from the European Union cannot participate in the scheme for exchanging blocked assets with Russian investors, launched in March 2024, due to the participation of the National Settlement Depository (NSD), according to Directorate-General for Financial Stability, Financial Services and Capital Markets Union FAQ, published on Thursday on the European Commission website.
EU individuals and legal entities will be prohibited from participating in the asset swap scheme due to NSD's participation, says a response to a question about the possibility of participating in the asset swap scheme provided for under Russian Presidential Decree No. 844.
As NSD is on the EU sanctions list, all funds and economic resources belonging to NSD, under its ownership or control, must be frozen, and no funds or economic resources may be provided to NSD, either directly or indirectly.
President Vladimir Putin in November 2023 signed Decree No. 844 "On additional temporary economic measures related to the circulation of foreign securities", which sets conditions to exchange investors' assets blocked in Russia and abroad. The decree stipulates that only foreign securities recorded in the accounts of the NSD may be tendered for repurchase.
Russia's Investment Chamber brokerage, which has been mandated to organize the exchange of frozen assets, started collecting applications from non-residents to take part in this procedure from June 3, with the original deadline on July 5, but it then extended this deadline until August 2 "upon the request of potential non-resident buyers." Applications were accepted from resident individuals from March 25 to May 8. Investment Chamber formed 100 lots with an average value of 353.1 million rubles each. Settlements for the transactions are scheduled for August 12.
The Investment Chamber in April reported interest in the exchange of assets from a number of banks and funds from the United States, European Union, and the UK, with declared demand measured in tens of billions of rubles.
The EU imposed sanctions against NSD in June 2022. The United States sanctioned the Moscow Exchange and the MOEX Group's NSD and National Clearing Center in June 2024.
The Investment Chamber has said it does not expect a significant impact from sanctions against the Moscow Exchange on the repurchase of foreign securities of Russian investors by non-residents.
"NSD was under EU sanctions even before the repurchase transaction began. Moreover, each potential non-resident buyer independently decides whether to participate in the process," the Investment Chamber has said.
The movement of foreign securities will take place within the Russian depository infrastructure and in accordance with the regulatory framework of Russian jurisdiction, the press service said. "It is important to note that non-resident buyers do not interact directly with NSD both at the repurchase stage and subsequently when transferring securities to a foreign depository," it said.
NSD will not charge commission for settlements as part of the procedure for repurchasing foreign securities, the Investment Chamber said. "This should provide foreign investors with additional comfort from the point of view of compliance with sanctions regulations. The NSD's role is technical and is to keep records of transactions. Cash settlements during the exchange will take place outside the NSD," the Investment Chamber said.
