Russia: Update on conversion process for depository receipts with Russian underlying securities held in the German market
This Announcement supersedes D23041.
Following the designation of the Russian CSD, the National Settlement Depository, by the United States on 12 June 2024 and the issuance of OFAC’s General License 100 permitting winddown transactions until 13 August 2024, Clearstream Banking1 has invested in an exceptional process to deliver a solution to clients to convert affected ADR/GDR holdings for the benefit of underlying investors who hold authorisation of an EU Member State pursuant to Article 6b(5aa) of Regulation (EU) 269/2014 by providing an alternative facility to enable conversions under specific conditions described below.
Clearstream Banking invested in an exceptional process by providing an alternative facility to enable conversions under specific conditions described below.
Clients intending to instruct conversions under the guidelines mentioned below are reminded that OFAC’s General License 100 permits conversions into underlying shares issued in the National Settlement Depository only until 13 August 2024. Clearstream Banking expects that depository agents will close their programmes to conversions in advance of that date to ensure that the conversions can be completed in the domestic market with the validity period of the license.
Clients whose clients received the authorisation by the competent authority pursuant to Article 6b(5aa) of Regulation (EU) 269/2014 with the stated timeframe, can convert a depository receipt (DR) with Russian underlying security held with the National Settlement Depository.
The relevant text reads:
‘5aa. By way of derogation from Article 2, competent authorities of a Member State may authorise the conversion by 25 December 2023 by nationals or residents of a Member State, or an entity established in the Union, of a depositary receipt with Russian underlying security held with the entity listed under entry number 101 under the heading “Entities” in Annex I for the purpose of selling the underlying security, and the making available of funds linked to the conversion of the depositary receipt and to the sale of the underlying security directly or indirectly to that entity in Russia, under such conditions as the competent authorities deem appropriate and after having determined that:
(a) the depositary receipt was issued before 3 June 2022;
(b) the relevant request for authorisation is submitted by 25 September 2023;
(c) the holder of the depositary receipt is able to demonstrate that such conversion is necessary for the sale of the underlying security;
(d) the sale of the underlying security is compliant with prohibitions under Regulation No 833/2014, including Articles 5 and 5f; and
(e) no funds will be made available to any other entity listed in Annex I.’
Impact on clients
For any ADR/GDR conversion instruction, in respect of the below securities, Clearstream Banking clients must represent that they have obtained authorisation under Article 6b(5aa) of Regulation (EU) 269/2014 and provide:
(a) the name of the competent authority of the Member State which has granted the authorisation,
(b) the reference number of the authorisation, and
(c) the date of the authorisation.
The wording required in client instruction : “EU Reg. 269/2014 art. 6b 5aa COMP. License nb: xxxxxx date: dd/mm/yyyy– Issuing NCA: xxxx.”
Instructions without the required representation of sanctions compliance will be rejected.
Notwithstanding the above requirements, clients are required to ensure that any instruction submitted to Clearstream complies with applicable laws, including any applicable sanctions, including but not limited to those of the European Union, the United Nations, the United States and the United Kingdom.
Only positions where the books are open for conversion will be eligible. Currently, the programmes opened for conversion by the DR agents are the following:
ISIN code | Underlying | Security name |
US67011U2087 | RU0009084446 | GDR NOVOROSSIYSK CSPP REGS REG |
US6074091090 | RU0007775219 | ADR MOBILE TEL PJSC REG (1ADR/2SHS) |
US69343R1014 | RU0009062285 | GDR PJSC AEROFLOT REG |
Clients are reminded that books for conversion can be closed at any moment which will prevent any conversion of their DRs to underlying Russian shares. Clearstream Banking advises clients that it understands programmess for which Citibank NA acts as DR agent are not currently accepting conversion instructions. Clearstream will keep clients informed.
Clearstream Banking makes no recommendation and gives no investment, legal or tax advice regarding the above matters. Clearstream Banking shall not be liable, and clients electing to instruct conversion of their DRs bear sole responsibility, for any and all harmful consequences, losses or damages, which may be suffered by clients or DR holders in connection therewith.
Clearstream Banking shall bear no responsibility for any delay in case any of these cannot be acted upon or executed, due to sanctions, monitoring activities or any circumstance beyond Clearstream Banking’s field of action.
Further information
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany, and registered in Register B of the Amtsgericht Frankfurt am Main, Germany, under number HRB 7500.