Central Bank of Russia intends to maintain direct access of foreign securities to accounting infrastructure
MOSCOW. Dec 22 (Interfax) - The Central Bank of Russia has deemed it appropriate to maintain direct access of foreign securities to the Russian accounting infrastructure on a relative basis, ending the restriction on availability to depository receipts, following the public discussion of the Depository Accounting: A New Look at Familiar Aspects advisory report posted on the regulator's website.
Only two participants fully supported the proposal to admit foreign securities on a relative basis exclusively through Russian depository receipts, according to the report. However, the Central Bank said that the professional participants do not oppose developing the depository receipt system, recognizing the feasibility of its use if it is necessary to remove current regulatory barriers, namely to admit foreign securities from jurisdictions lacking the nominee holder system, particularly from Asian markets.
Considering this, the Central Bank plans to develop measures to remove barriers to use depository receipts and further develop mechanisms to account for the specifics of foreign jurisdictions and foreign counterparties as aimed at minimizing risks associated with cross-border accounting.
The Central Bank also intends to require depositories to inform clients about the risks associated with foreign jurisdictions. Furthermore, the regulator plans to define a list of circumstances by which accounting institutions would be exempt from liability to depositors, namely when foreign states impose sanctions or foreign companies are nationalized, the Central Bank said.
The report has proposed establishing a uniform procedure for depositories to follow regarding the blocking or partial write-off of foreign securities belonging to Russian holders by foreign depositories. The Central Bank intends to develop mechanisms for proportional write-offs of securities to ensure a fair distribution of losses, as well as methods for the marked circulation of blocked foreign securities, as based on the feedback received.
Additionally, there are plans to establish uniform rules for depositories to maintain separate records of Russian securities in the accounts of foreign nominee holders. "Depositories will be required to adhere to these rules if they choose this form of depository accounting," the regulator explained.
The Central Bank also deems it appropriate to limit the rights to securities held in the accounts of a foreign nominee holder that has refused to disclose ownership information.
