Putin signed a decree on the exchange of investor assets within ₽100 thousand.

Vladimir Putin signed a decree on the exchange of frozen assets of Russian investors with foreigners. it will affect assets worth up to 100 thousand rubles. The decree also eliminates the need for the legal commission to approve transactions with non-residents

The scheme, which should lead to the exchange of frozen assets of Russian investors with foreigners, will affect assets worth up to 100 thousand rubles, follows from the decree of President Vladimir Putin, published on the evening of November 8.

The mechanism began to be discussed in August, when the HEAD of the Ministry of Finance, Anton Siluanov, said that the Central Bank and the government had prepared a draft decree on unlocking part of the foreign assets of Russians for exchange for domestic ones. The Central Bank specified that this would mainly affect retail investors, and RBC sources already noted that the investment threshold could be 100 thousand rubles. Siluanov emphasized that at the first stage, the authorities plan to unblock type “C” accounts, where frozen assets of foreigners are stored, amounting to about 100 billion rubles. Thus, according to this scheme, the authorities must unfreeze foreign money in RUSSIA, and domestic investors must receive it in exchange for securities frozen abroad.

Putin’s decree states that deals with foreigners will be concluded “through bidding.” The conditions for conducting such trades and completing transactions (operations) will have to be established by the government commission for control of foreign investments in Russia, the text of the decree says. RBC sent a request to the Ministry of Finance , which oversees the work of this commission.

The Central Bank will regulate the exchange mechanism. The text of the decree states that the Board of Directors of the Bank of Russia will establish the procedure for interaction between brokers and clients on this issue, features of identification of non-residents, as well as “the regime of the owner’s special transit securities account.” Previously, such accounts were not introduced for transactions with securities. The decree specifies that these accounts will be credited with foreign securities that non-residents buy from Russians. Such accounts will be opened in the name of non-resident buyers in Russian depositories, the document says. In the future, on behalf of non-resident buyers, securities can be written off “to accounts opened in foreign organizations or to special transit securities accounts of the owner opened in the name of other persons.”

RBC sent a request to the Bank of Russia.

The decree also states that professional participants in the securities market (brokers, management companies and trading organizers) will not charge Russian investors fees for transactions in foreign securities. At the same time, the document makes no mention of exemption from paying commissions for foreigners.

RBC Pro development program Managing attention and time: a new skill Mindfulness: methods of personal and organizational development “Anti-time management”: how to learn to manage everything Why managing attention is now more important than time management How to memorize 30 pages at a time - advice from the Swedish Grand Master of Memory Why is the principle of “doing more in less time” dangerous? Do it tomorrow and other secrets of time management. What other features of transactions are established by the decree? For transactions with foreign securities, you do not need to obtain permission from a government commission.

In accordance with Presidential Decree No. 81, which was adopted last spring, all transactions with foreigners that result in ownership of securities must be approved. The exchange is excluded from the scope of this decree.

Transactions between Russian investors and persons from unfriendly states are permitted, as a result of which ownership rights to foreign securities arise.

But two conditions must be met: firstly, the papers must be stored abroad; secondly, you also need to pay for papers in foreign infrastructure. At the same time, Russian securities and Eurobonds are excluded from the scope of this provision of the decree.

How can the decree work in practice, and will foreigners be interested in the exchange?

In fact, the decree provides for the introduction of a procedure for trading foreign securities owned by Russian investors and which are blocked in foreign depositories, notes Aram Grigoryan, partner at the NSP law office.

At the same time, Russian investors can refuse to participate in the exchange and choose the path of obtaining licenses from foreign regulators and unlocking assets by transferring them to an account abroad, adds Ekaterina Popova, lawyer at ITSWM multi-family office. “This option is used by owners of large portfolios, since the cost of the process of obtaining a license to unlock assets can be significant. The second option (exchange by decree -) may be useful for small investors,” Popova believes.

After the transaction is completed, foreigners will be able to withdraw the securities purchased from the Russians, Grigoryan believes. The decree also makes it possible to transfer these assets to a person in the Russian infrastructure, the expert points out. But implementing the translation can be difficult, Popova adds. “For foreign investors, this mechanism in itself does not guarantee receipt of the acquired assets, since the securities will still remain blocked due to sanctions against NSD (“National Settlement Depository.” -), a foreign investor will have to obtain a license to transfer assets from NSD to your own account outside the Russian Federation,” explains the expert. Obtaining licenses will entail additional costs for foreigners, which makes the exchange less attractive for them.

European regulators have previously expressed skepticism about the mechanism for exchanging blocked assets in the public space, says Anastasia Kayukova, head of antitrust and regulatory projects at the law firm VEGAS LEX. But there is no official response to the provisions of the decree on the exchange, the expert points out. “Foreigners will probably expect clarification to what extent such transactions comply with the sanctions regimes on their side,” adds Roman Suslov, senior lawyer at the KIAP law office. Kira Vinokurova, co-head of the sanctions law and compliance practice at Pen & Paper, believes that foreigners will be interested in such an exchange primarily because there is no need to obtain permission for transactions from the legal commission.

Why foreign securities of Russians and money of foreign investors were blocked

In the spring of 2022, after the start of Russia’s special military operation in Ukraine and the imposition of sanctions against the Russian financial system, foreign depositories Euroclear and Clearstream stopped conducting transactions (purchase and sale transactions, payment of coupons, dividends) on foreign securities owned by Russian investors. At first, operations were suspended until clarification was received from European regulatory authorities, and in June 2022, after the “ National Settlement Depository” was included in the EU sanctions list (participates in the chain of accounting for the assets of Russians), all relations with the Russian side were finally terminated. According to the Central Bank, about 5.7 trillion rubles are frozen in accounts abroad. funds of Russians, a little more than 20% of this amount are funds of investors - individuals.

Foreign investors who own Russian securities also cannot carry out transactions with them: at the end of February 2022, the Central Bank prohibited brokers from executing orders for such transactions. Non-residents receive payments on securities to type “C” accounts; this money can be used to pay fees for maintaining these accounts, pay taxes, duties and other mandatory payments in the Russian circuit. It is impossible to withdraw funds abroad without the permission of the government commission.