Page 111 - RusRPTJan23

8.3 Stock market
8.3.1 Equity market dynamics
Both of the largest European depositories, where the assets of Russian private investors are stuck - Euroclear and Clearstream - after months of waiting, allowed the assets to be withdrawn in December.
We are talking about securities worth more than €50bn, and the permits are valid until January 7. Russian depositary NSD and brokers are urgently trying to figure out how to save the assets.
Following the Ministry of Finance of Luxembourg, which on the eve issued a permit to unlock the assets of Russian clients to the Clearstream depository, the Belgian Ministry of Finance issued a similar permit to the Euroclear depository, which held most of the Russian assets. The decision of the Belgian authorities is a key one: in November, Politico, citing a document from the European Commission, wrote that Russian assets worth €50bn were frozen in Belgium (Euroclear), and €5.5bn in Luxembourg.
At the end of February, Euroclear and Clearstream froze all foreign shares of Russian investors, the chain of custody of which was organized through the NSD depository. The European partners of NSD decided to play it safe and, without waiting for the imposition of sanctions against him (this happened only on June 3), suspended all operations with him. As a result, according to the Central Bank, assets worth 6 trillion rubles were frozen, including foreign shares worth 320bn rubles owned by individuals. We wrote about how clients of Russian brokers tried to fight for their shares here.
Now investors who have not fallen under the sanctions have received a formal chance to return their securities. But whether this will work in practice is still not clear. The licenses issued by the financial authorities of Belgium and Luxembourg give until January 7 to unlock the assets. And NSD itself and the Central Bank have not yet commented on the possibility of returning assets. As of Wednesday, brokers also did not have full-fledged information, and NSD promised to provide them with all relevant information at the next meeting of the Investor Protection Club on Friday, December 24th.
There are different versions on the market about the purpose of issuing licenses for unlocking to European brokers and the real prospect of returning assets to Russians. One of the popular theories (for example, it is presented here by investment lawyer Elena Ryazanova) is that they decided to open the “window” until January 7 in order to allow NSD's few foreign clients to withdraw their securities from Russia. However, this theory is based on the presence in the Luxembourg license of a clause obliging the applicant to prove the rupture of relations with NSD (for a Russian broker, this clause is impossible, say supporters of this version). But there is no such clause in today's Belgian license.
111 RUSSIA Country Report January 2023 www.intellinews.com