Bank of Russia limits opportunities for accelerated sale of foreign depositary receipts converted into shares

To maintain financial stability, the Bank of Russia ordered the professional market participants-depositories to maintain separate accounting of Russian issuer shares received as a result of the conversion of foreign depositary receipts, and to limit the intraday debits of such securities at the level of 0.2% of their number. The above restrictions apply to both on- and off-exchange trades.

The prescribed measures are not applicable if foreign depositary receipts were purchased before 1 March 2022 or the securities holder has the permission of the Government Commission.

The Bank of Russia noted a trend for residents to acquire depositary receipts from non-residents from unfriendly countries, convert them into shares and sell the shares via on-exchange trading. Such practice may result in a disproportionate increase in the supply of local stocks in the market, which may have a significant impact on pricing and provoke a drop in stock prices. In turn, such situation may entail a negative revaluation of assets among Russian investors and jeopardise the stability of the financial market. These measures are aimed at stabilising the situation.

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