Trade resumes: Mosbirja engages in over-the-counter transactions involving Apple, Tesla, and Microsoft stocks
📰 Markets FBI
In a surprising turn of events, the National Clearing Centre, a division of the Moscow Exchange group, has given the green light to over-the-counter (OTC) trading of 127 foreign securities. This roster includes ETF funds offered by FinEx and also encompasses some of the largest U.S. companies, such as Apple, Amazon, Cisco Systems, Microsoft, Tesla, Berkshire Hathaway, Alphabet, NVIDIA, Visa, among others.
Sadly, these trades have been on ice ever since spring 2022 due to foreign depositories slapping restrictions on the accounts of the National Settlement Depository (NSD).
The Moscow Exchange's press service has confirmed the resurgence of the OTC service, boasting the technological capacity to execute OTC deals with these 127 foreign securities accessible in the NSD. However, this market freedom is not for everyone - only qualified investors can join the action, while their less-experienced peers can only engage in sales.
🗣️ Stocks Insider: Alexei Petrov
Amid the rocky tapestry of Western sanctions, the story feels a tad different. After Russia invaded Ukraine, the West slapped economic sanctions that not only targeted Russian entities but also aimed to put a muzzle on foreign financial intermediaries. Key tactics included:
- Strangling intermediaries: The US, EU, and UK forbade their financial institutions from footing Russian securities trades, disrupting cross-border settlements and custodial services for Russian investors.
- Rubber-stamp legislation: Russia's legislative response was to implement capital controls that prevented Russian investors from repatriating funds through foreign exchanges, effectively freezing foreign securities.
🔄 Navigating the Storm: National Clearing Centre & Moscow Exchange's Response
In reaction to the adversity, the National Clearing Centre (NCC) and Moscow Exchange maneuvered around these constraints with their sand-dune surfing skills:
- Homeland transactions: Prioritizing ruble-denominated transactions and focusing on domestic securities while minimizing foreign currency settlements.
- Asset immobilization: Converting foreign securities into special depository receipts, confining them within Russia's closed financial system.
- Regulatory leeway: Encouraging delayed settlement mechanisms, alternative payment channels, and other workaround tactics to dance around SWIFT-related impediments.
Despite their valiant efforts, these measures have served to effectively isolate Russian investors from global markets, converting foreign securities into illiquid instruments within Russia’s sanctioned financial ecosystem.
[^1^]: Despite the sources' vagueness in these areas, homeland transactions likely follow Russia’s broader strategy of financial insulation described in sources[4] and[1].
[^2^]: The depository receipt mechanism is inferred from Russia’s historical use of such tools and the sanctions context described in[2] and[4].
- The National Clearing Centre has recently enabled over-the-counter (OTC) trading of securities like Visa in 2022, marking a shift in the finance landscape, despite the ongoing challenges posed by foreign sanctions.
- Although OTC trading of securities such as Apple and Tesla has been restored in Moscow, access to this financial opportunity is limited to qualified investors, with less-experienced peers only able to participate in sales.
- In an attempt to counteract the effects of Western sanctions, the National Clearing Centre and Moscow Exchange have implemented measures like asset immobilization (converting foreign securities into special depository receipts) and focusing on homeland transactions, aiming to create a self-sustaining, yet isolated, financial ecosystem.
