Russian central bank puts brakes on sale of shares converted from GDRs

div classBodysc17zpet90 cdBBJodivpReuters – Investors who buy the depositary receipts GDRs of Russiancompanies that were traded on foreign exchanges in order to swap them into shares will be unable to sell the shares quickly, Russias central bank said in a statement on Wednesday.p

pA law that came into effect this month requires Russian companies to delist their depositary receipts from foreign bourses and convert them into local securities in a bid to reduce foreign control.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pCiting the need to support financial stability, the central bank said it had told Russian depositories to account separately for shares issued through GDR conversion, and to limit sales on any given day to 0.2 of the amount converted.p

pThe new rule applies both to transactions on the Moscow Exchange and to overthecounter deals, the central bank said.p

pAs trading in Russian GDRs had already been suspended on Western bourses, investors from “unfriendly countries” – meaning those that have subjected Russia to sanctions – may have preferred to offload their GDRs to Russians rather than risk trying to recoup their value amid Moscows capital controls.p

pThe bank, which is also Russias securities regulator, said it had acted after noticing that Russian residents were buying GDRs from these investors and hoping to sell the shares after they were converted.p

pIt said such deals could trigger price falls on the Russian stock market and undermine the stability of the financial sector.p

pThe rule will not apply to shares converted from GDRs bought before March 1, or if a government commission grants a waiver.p

pWestern bourses halted trading in the GDRs of major Russian companies including Rosneft, Sberbank, and Gazprom when their price crashed after Russia sent troops into Ukraine on Feb. 24.p

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pp Reporting by Reuters Editing by Kevin Liffeyp

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