Page 105 - RusRPTSept22

opportunity to save themselves from losses by selling papers on time. Together with the affected investors, The Bell figured out what happened.
Russian stock exchanges and brokers actively offered investors to invest in foreign stocks and other securities. At the end of last year, their investments in foreign shares and receipts were close to a trillion rubles. Almost immediately after the start of the war, a significant part of these papers was frozen. According to the Central Bank, a total of 5mn Russians faced the blocking of shares, and the value of the frozen assets amounted to RUB320bn.
The first victims were clients of brokers VTB, Otkritie, Sovcombank and Novikombank. These banks already fell under blocking sanctions on February 24. The US Treasury, in accordance with usual practice, gave counterparties of sanctioned banks a month (until March 26) to complete transactions with them. But the problems started much earlier.
Already on February 25, one of the key counterparties of Russian stock market participants, the European depository Euroclear, on its own initiative suspended all operations with the Russian depository NSD until clarification was received from European regulators (the suspension was officially announced only on March 17). It was this event that became critical for the owners of foreign securities.
Euroclear was the parent depository where NSD held and settled foreign assets. NSD itself, which is part of the Moscow Exchange group, kept all foreign securities that investors bought on the Moscow Exchange, and some of the securities bought on the St. Petersburg Exchange (the rest of the stock was stored in foreign depositories). As a result of the break in the NSD-Euroclear chain, all securities accounted for by NSD were immediately blocked.
The papers bought through the Moscow Exchange were blocked all at once. The situation with the St. Petersburg Stock Exchange (and it accounted for 96% of the foreign securities market in Russia) turned out to be more complicated. The securities accounting scheme at this site did not allow her to immediately separate blocked securities from unblocked ones. This was only possible with the securities of those brokers who kept their entire portfolio with NSD. Apparently, there were only two of them - VTB and Otkritie. The St. Petersburg Exchange immediately transferred the securities of their clients to the non-trading section. In fact, this meant that any operations with them became impossible.
The sanctioned companies themselves, meanwhile, tried to save the situation - they announced the transfer of their clients' portfolios to other brokers that did not fall under the sanctions. VTB transferred the securities to Alfa-Bank and Rosselkhozbank brokers. This really removed the securities from sanctions, but the freeze due to the actions of Euroclear could not be cancelled in any way - even from the March messages of the St. Petersburg Exchange it directly followed that the shares were already on non-trading accounts by the time of the transfer, and the transfer was carried out by non-trading orders. Alfa-Bank explained that it was impossible to transfer the securities back to the trading account - for this they would have to go through Euroclear.
105 RUSSIA Country Report September 2022 www.intellinews.com