The Bank of Russia (CBR) is taking steps to unlock the frozen accounts of depositories from “friendly” states in order to attract foreign investors to the country’s financial market, according to sources cited by business daily, RBK. These sources explained that investors from countries that have not imposed sanctions on Russia are currently unable to operate on the Russian market because their foreign depositories are “locked” in ruble-denominated C-type accounts, which cannot be held in foreign currency or in a foreign financial institution. The CBR recognizes the need to facilitate the entry of more foreign investors into the market and is actively working on mechanisms to address this issue.
The report highlights that although foreign investors’ accounts were completely blocked after the start of the military operation in Ukraine and the imposition of Western sanctions, they still had limited access to the Russian market. Investors from “friendly” states can reportedly engage in futures and bond market transactions and trade Russian shares, with the exception of securities of strategic importance and certain enterprises. However, this is only possible if the non-resident investor is a client of a local broker, management company, or bank, and undergoes the necessary identification process.
For non-residents who work through foreign depositories, the C-type account mode applies, which restricts the crediting and debiting of securities and makes it impossible to withdraw funds. The Central Bank does, however, allow an exception to this rule when working through a foreign depository registered in Belarus. Despite this limitation, the CBR is actively collaborating with market participants to address the concerns raised by investors and find a solution that allows for greater foreign investor participation.
It is worth noting that Russia froze the assets of international depositories in response to the seizure of its state funds by Western financial institutions. Reports from Euroclear and Deutsche Börse Group indicate that Moscow blocked 229.1 billion rubles ($2.3 billion) of assets belonging to Belgium’s Euroclear and Luxembourg’s Clearstream clearing houses.
The move by the Bank of Russia to unlock the accounts of foreign depositories demonstrates the country’s intention to promote a more open and inclusive financial market. By addressing the concerns of investors from “friendly” states, Russia is taking steps to attract more foreign capital and encourage international participation in its financial market.
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