Luxembourg allowed to unlock part of the frozen assets of NSD

Depositories Euroclear and Clearstream suspended NSD's accounts in May. Frank Media reported that because of this, €4.5–7 billion of Russian funds were frozen. Luxembourg has allowed the release of assets,

The Luxembourg Ministry of Finance has given permission to unlock assets, securities and coupon income that were stuck in the Clearstream international depository before the sanctions imposed by the European Union on the National Settlement Depository (NSD) in early June. This is stated in the message on the website of the regulator.

The document notes that we are talking about the assets of NSD, which were accounted for in Clearstream before June 3. The license authorizes the "release of certain cash and economic resources" held by NSD. This permit is valid until January 7, 2023 inclusive.

RBC sent a request to NSD.

NSD is the central depository in Russia. It keeps records of ownership of securities, as well as settlements of transactions. In addition, NSD is an intermediate storage facility for certain foreign securities traded on the St. Petersburg Exchange and the Moscow Exchange. He has accounts with international depositories Euroclear and Clearstream.

The European Union imposed blocking sanctions on NSD on June 3. Getting under blocking EU sanctions means a complete freeze of the company's assets in the territory of the EU countries, as well as a ban for residents of individuals and legal entities of these states to carry out transactions and operations with the Russian depository. The EU then explained that NSD is almost wholly owned by the Moscow Exchange, which, in turn, "due to its role and shareholders is in a high degree of control by the Russian government."

Before the EU sanctions, NSD also suffered from the actions of international depositories. For example, back in March, Euroclear and Clearstream (headquartered in Luxembourg) suspended NSD's accounts, which resulted in the freezing of some of the Russian investors' securities, and they stopped receiving dividends and coupons. By June 10, €4.5–7 billion of funds from banks and investors from Russia were frozen on NSD's accounts, wrote the Frank Media portal.

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On June 18, the president of the National Association of Stock Market Participants (NAUFOR), Alexei Timofeev, told RBC Investments that he plans to file lawsuits against international depositories in order to unblock investors' securities.

“In this direction, NAUFOR is working together with NSD and the Moscow Exchange,” Timofeev said. He pointed out that Russians and Russian companies that did not fall under the sanctions should not be limited in the disposal of their property in terms of EU law.

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In early October, the European Commission confirmed the possibility of unlocking the assets of Russians who did not fall under the sanctions. To do this, you need to obtain permission from European regulators, which can set their own conditions for issuing such permits. Permits can only be used to complete all transactions with Russian counterparties. Such transactions must be completed by January 7, 2023.

In October, the Central Bank allowed the exchange of frozen assets between Russian and foreign investors. At the same time, they noted that this is possible only if all Russian investors can receive proportional compensation for losses.