The Central Securities Depository (CSD) of Kazakhstan said on July 11 that it had ordered brokers and management companies to divest Russian securities from their holdings by August 10. The CSD's press service said the move was necessary to adhere to U.S. sanctions imposed on the Moscow Stock Exchange (MSE) and its structures.
RBC says Kazakhstan’s Central Bank confirmed the media reports and said the decision was due to the introduction of US sanctions against the MOEX-owned National Settlement Depository (NSD).
In a message to the press, Kazakhstan’s Central Bank acknowledged the US Treasury Department’s deadline of August 13 for any transactions for the divestment from the MOEX. It then set a date for August 10 in Kazakhstan, in an effort to ensure that all transactions are processed before the deadline.
Vlast.kz says Kazakhstan is tied to the Russian securities and other financial instruments both because of the Kazakhstan-based brokers and asset managers holdings and because MOEX owns a 13.1% stake in the Kazakhstan Stock Exchange (KASE).
Experts note that the decision will mark a blow to the international availability and reliability of Russia-linked securities, since other markets could follow in Kazakhstan’s footsteps.
On June 13, the United States imposed sanctions on several major financial structures in Russia, including the MSE, the National Clearing Center, and the National Settlement Depository, which act as intermediaries in trading dollars on the Russian currency market.
According to Vlast.kz, analysts said this decision could have been influenced by a request by Euroclear, a Brussels-based financial services company that operates the world’s biggest bond settlement system.
The Financial Times (FT) notes that Euroclear earned €4.4 billion last year from Russian assets that were frozen by sanctions that were imposed on Russia after it launched its so-called “special military operation” in Ukraine. By not paying out cash balances to sanctioned actors, such as the Russian Central Bank, Euroclear was able to inflate its balance sheet.
Several Russian actors have sued Euroclear, in an effort to recover their funds.
Perhaps in an attempt to avoid legal battles, Kazakhstan’s regulators are now urging asset managers and brokers to simply divest, thus avoiding relations with sanctioned actors.
