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Duma Committee Passes Amendments to Launch Foreign Shares Trading in Russia

10.06.2014 18:21 / Interfax

The State Duma Financial Markets Committee has approved statutory amendments to launch foreign share trading on Russian exchanges.

The investment community has been actively debating the issue in recent months, when foreign blue chips such as Facebook and Google enjoyed a growing popularity among local retail investors as the Russian market remained highly volatile. At the moment, buying them through brokers incurs extra costs.

For many years, foreign companies have been able to access the Russian market through Russian Depositary Receipts, however the issuers show almost no interest, with the exception of UC Rusal, listed in Hong Kong. Last year, Moscow Exchange offered direct access to American Depositary Receipts of a foreign issuer QIWI plc, a company with its main business activity in Russia, like Rusal.

Now exchange trading is about to open for foreign companies per se. In mid-May, the Central Bank’s Consumer Rights Council debated the issue. Experts agreed that the instrument is very lucrative for Russian market participants, and the proposed exchange trading model bypasses mandatory agreement with the issuer, said Council Chairman Anatoly Gavrilenko. “In 1H we plan to make everything ready for bringing foreign shares to the Russian market”, CB Deputy Chairman Sergey Shvetsov told a NAUFOR conference.

On Tuesday, instead of drafting a separate bill, the State Duma Financial Market Committee passed relevant amendments as part of the federal law that targeted NPF corporatization in the first reading. The amendments formed part of the second reading.

Foreign issuers may be traded in Russia by permission of the Russian exchange. The security must be listed on one of the foreign exchanges approved by the CB. If shares are not listed on the Russian exchange, access to trading does not require an agreement with the issuer. Foreign law should allow unlimited access to the shares in Russia.

Disclosure in Russian will not be required. According to the document, “information regarding securities and their issuer is to be disclosed in Russian or in a foreign language practiced in the financial market”.

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