Clearstream suspends conversion of DRs to Russian shares after new sanctions package

MOSCOW. June 29 (Interfax) - Clearstream Banking has suspended the processing of new instructions to convert voluntarily or to cancel holdings in ADR and GDR programs with Russian underlying equities until further notice, the clearing system reported on Wednesday.

Russia's National Settlement Depository (NSD) extended its fee waiver in relation to voluntary conversions and cancellations until December 30, 2023, Clearstream recalled. The waiver had until now allowed European clearing systems to carry out transactions that involved the NSD, which is subject to sanctions. But the situation changed after the publication of the eleventh package of European Union sanctions against Russia on June 23.

With the new document the EU has empowered member state competent authorities to authorise conversions of a depository receipt with Russian underlying security held with the NSD until December 25, 2023 (requests for authorization must be submitted by September 25), Clearstream said.

In the sense of the current regulation, all Russian securities are ultimately held with the NSD as issuer central securities depository, and Clearstream Banking, having consulted its competent authority, interprets the amendment to mean that conversions which have not been authorized by the relevant competent authorities are now prohibited, the press release said.

Clearstream Banking "is seeking guidance from its competent authorities on the practical steps that must be followed to obtain authorisation" and, "[u]ntil the guidance is received, Clearstream Banking is unable to process instructions for the conversion or cancellation of positions in depository receipts with Russian underlying securities," the clearing system said.