Illustrative photo from open sources
Individuals and legal entities from EU countries are prohibited from participating in the asset swap scheme between investors proposed by Russia due to the participation in the deal of the National Settlement Depository (NSD), which is under sanctions after the Russian military invasion of Ukraine. This is stated in the explanations of the Directorate General of the Union for Financial Stability, Financial Services and Capital Markets, which were published by the European Commission on July 24, Radio Liberty reports.
“No funds or economic resources may be provided to the NSD, either directly or indirectly,” the document says.
Thus, the European Commission's regulatory body has taken a tough stance on the swap after NSD, which has been under European sanctions for two years, fell under blocking restrictions from the United States on June 12, 2024. Before that, the European Commission bodies had not officially commented on the possibility of EU persons participating in the asset swap procedure with Russians.
This scheme allows Russian retail investors to submit proposals to exchange Western securities that are currently frozen in NSD accounts in EU securities depositories for funds of hostile investors blocked in Russia in Type C accounts.
The exchange of assets between Russian and foreign investors is planned to take place on August 12. The organizer of the exchange is the broker “Investment Chamber”. According to his data, as of June, Russian investors offered securities worth more than 35 billion rubles for the exchange of blocked assets.
Earlier, a representative of the Investment Chamber told RBC that the exchange mechanism is designed to minimize the role of the NSD in it. The role of the NSD is technical and consists of keeping records of transactions. Settlements in cash during the exchange will take place outside the NSD, the broker's representative explained.
The decree of the President of Russia on the exchange of assets was signed in November 2023. It states that investors from Russia will be able to sell their blocked foreign securities in the amount of no more than one hundred thousand rubles to non-residents. Non-residents can use funds from type C accounts to purchase these securities (payments on Russian securities owned by foreigners are sent to these accounts). Money from type C accounts cannot be withdrawn and freely used. To implement the exchange mechanism, Russian authorities are ready to unfreeze part of the funds in type C accounts, and foreigners will be allowed to withdraw all assets bought from Russians without obtaining approvals in Russia.
Prepared by: Sergey Daga