Euroclear confirms extension of Russian DR conversion after NSD renews zero rate

MOSCOW. Aug 19 (Interfax) - The period in which Euroclear will execute instructions to convert depositary receipts (DR) into the shares of Russian issuers has been extended again.

Conversion of Russian companies' DRs was put on hold after the imposition of blocking sanctions against the Moscow Exchange Group's National Settlement Depository (NSD) on June 3. European settlements and clearing systems Euroclear and Clearstream went by the clarification of the Directorate-General of the Financial Stability, Financial Services and Capital Markets Union (DG FISMA) that any transaction that directly or indirectly leads to the creation of obligations to the NSD are subject to European Union sanctions and cannot be carried out.

The NSD, in turn, introduced a marketing period during which it did not charge any payment for services to transfer shares to/from accounts for underlying securities of DR programs, initially until July 31. This made it possible to resume conversion of DRs for as long as the fee was zero, since the NSD did not get any economic benefits from this, Clearstream said.

The NSD decided at the end of July to extend the marketing period until August 14, inclusive, after which Euroclear said it would continue to execute instructions to convert DRs to shares until the new deadline.

Then last week the NSD extended the zero rate until the middle of October.

The NSD announced that it will forego payment until October 15, and since the NSD will not receive any economic benefits from conversion Euroclear will continue to execute instructions to convert DRs to Russian shares, the clearing system said in a notice to depositories.