Most share owners did just that. 98% clients have already transferred shares to the CD account, the remaining 2% are ‘sleepers’, says a major bank source. The remainder of clients who do not wish to transfer their shares to the CD are only a few per cent with zero account balance or fractions of former portfolios, says General Director at Computershare registrar Sergey Berezhnoy.

Today, total share value in CD accounts exceeds RUB 16 trillion, said a CD representative. In the past few months since the NSD has been awarded the CD license, shares worth some 7 trillion, or roughly 30% of the market capitalization, changed their safekeeping accounts, says Head of Central Depositary Eddie Astanin.

Nominee accounts at registrars were easier and cheaper for long-term investors, explains Berezhnoy: “They were the ones who transferred the shares to the CD – to expedite future sales”.

“Many serious investment funds have come to Russia, saying they now can increase the amount of local shares in their portfolios (they keep the bulk in DRs)”, says Head of Equities at Citibank Alexey Fedotov. Many funds complained about having to keep Russian securities apart in different registrars. Citibank clients kept 40-45% shares like that, most of these positions have been transferred to the CD, says Fedotov.

Our market has become targeted by funds that have no local experience, continues Fedotov.

They are the ones to benefit from the depositary: lobbyists told the Government that the CD would attract capital, however capital drain has only increased so far, says ex-Deputy Finance Minister Alexey Savatyugin, who opposed the CD. The CD is not a ‘miracle cure’ and it will not redirect all investment flows to Russia at once, counters Fedotov. He compares the CD to a lifestyle upgrade: ‘like swapping your Lada for an Opel’.

Margarita Papchenkova

Trading infrastructure, Project Group №1