Bank of Russia sets down procedure for Russian investors to sell frozen assets

On 8 December 2023, the Bank of Russia’s Board of Directors adopted a decision establishing a procedure for the interaction of financial market participants to enable Russian investors to sell their foreign securities to persons of unfriendly states (“Decision”).

The decision was taken in pursuance of the Decree of the Russian President of 8 November 2023 “On additional temporary measures of an economic nature related to the circulation of foreign securities”, which granted Russian investors who own foreign securities held at foreign securities depositories (including Euroclear and Clearstream) the right to sellAccording to Decree of the President of the Russian Federation of 5 May 2022 No. 95 “On the temporary procedure for the performance of obligations owed to certain foreign creditors” such securities to persons of unfriendly states using the funds held in their type “C” accounts.

In particular, the Decision determines the procedure and timeframe for securities depositories to inform their participants of the terms and conditions of the sale of foreign securities, and the procedure for interaction among brokers, resident entities holding foreign securities to be disposed of and the bidding process organiser during the course of transactions to sell such securities.

According to the Bank of Russia’s website, the bidding process in relation to these foreign securities will be launched after the Government Commission approves the bidding rules and terms and conditions.

In addition, the Bank of Russia has pointed out the following specifics of the asset swap procedure:

• an investor may submit bids worth up to RUB 100,000. The procedure for calculating the value of securities to be sold will also be established by the Government Commission. Such securities will kept in separate accounts with securities depositories until the close of trading.
• after the bidding process is completed, the funds for the securities sold will be credited to the accounts designated by Russian investors. There will be no restrictions on how investors may use the funds received from the sale of their securities.
• non-residents wishing to take part in the bidding process are also invited to bid for the purchase of frozen securities. The assets purchased by them will be transferred to special transit securities accounts which will be opened based on the results of the bidding procedure. Foreign entities will be able to pay for the assets using the funds from their type C accounts.