7 Apr 2022 11:17

JP Morgan, BNY notify Clearstream of option to cancel depositary receipts of Russian issuers

MOSCOW. April 7 (Interfax) - JP Morgan and Bank of New York Mellon have re-opened their books for cancellation of depository receipts (DR) instruments with Russian underlying securities, for which they are DR agents, Clearstream reported, citing notifications from the banks.

Cancellation fees charged by the DR agents may need to be paid upfront above a certain threshold, Clearstream said.

Last week FT reported that Bank of New York Mellon had launched an arrangement that allows bank clients to convert DRs of Russian companies they hold into local stocks. This referred to the securities of about 20 major Russian companies.

The Russian authorities, meanwhile, are preparing to essentially force the delisting of DR representing shares in Russian companies. A bill requiring companies to delist from foreign exchanges has already been passed by the State Duma in the third reading. However, the Russian government will be able to allow DRs issued earlier to continue trading outside of Russia. The procedure for making such decisions will be determined by the government.

Under a draft government resolution seen by Interfax, exceptions will also be possible at the request of issuer companies, as well as without them, by decision of a subcommittee of the government commission for control over foreign investment set up at the Finance Ministry.

Holders of depositary receipts as of the date when the law goes into effect will automatically receive shares in the corresponding Russian companies in exchange for the receipts.

These changes were prepared by the Economic Development Ministry shortly after the collapse of the value of the depositary receipts of the largest Russian issuers on the London Stock Exchange (LSE) amid news of sanctions against Russia after the start of the military operation in Ukraine. As of March 2, the value of the receipts of Sberbank fell to 1 cent, while Gazprom receipts fell 89%, Lukoil was down 97.2%, Nornickel was down 37%, Rosneft was down 70.4%, Novatek was down 91%, etc. After this the LSE on March 3 suspended trading in the securities of 27 Russian companies.