Foreigners banned from selling Russian stocks as market set for limited reopening

March 23 (Reuters) – Russia plans to resume stock trading on Thursday after a nearly month-long hiatus, with 33 ruble-denominated stocks to trade on the Moscow Stock Exchange. Non-residents, however, will have to wait – they will not be able to sell stocks and bonds in OFZ rubles until April 1.

Trading in blue chips, including state lenders Sberbank (SBER.MM) and VTB (VTBR.MM), energy majors Rosneft (ROSN.MM) and Gazprom (GAZP.MM), will take place between 06:50 and 11:00 GMT, with short sales prohibited, the central bank said on Wednesday.

Russian shares were last traded on the Moscow Stock Exchange on February 25. The central bank then curbed trade as Western sanctions over events in Ukraine sent turmoil through markets.

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Until April 1, foreign investors are allowed to carry out operations to reduce their obligations, including repurchase agreements and agreements with derivative instruments, but not to sell shares or treasury bills in ruble OFZ , said the Moscow Stock Exchange.

The central bank has started buying OFZ ruble treasury bills to support the domestic debt market when it reopens on Monday, and the finance ministry said it plans to spend 1 trillion rubles to buy stocks of Russian companies.

The limited reopening of the MOEX comes after the SPB Exchange (SPBE.MM), Russia’s second-largest stock exchange, partially restarted foreign equity trading on Monday, allowing trading in the 15 most liquid stocks, including Apple (AAPL. O), Amazon (AMZN.O), Boeing (BA.N) and Alphabet (GOOGL.O).

As of midday Wednesday, SPB Exchange authorized the buying and selling of securities of 1,639 other foreign companies by domestic market participants, most of whom are Russian residents who use the platform to trade foreign stocks.

Trades and settlements are conducted in US dollars, but funds will remain in brokerage accounts and cannot be cashed out amid Western sanctions on Russia and capital controls Moscow has introduced in retaliation, the exchange said. .

FALL INTO A LOSS

Trading in OFZ government bonds restarted on Monday, with the powerhouse buying OFZ papers in a bid to limit volatility.

Yields on some OFZs, including benchmark 10-year Treasuries, climbed to nearly 20%, the level of the central bank’s benchmark interest rate, on Monday, before settling between 14 % and 17% the following days. Read more

The volatility has left some players exposed to losses, according to Univer Capital, a mid-sized Russian brokerage firm, which faced a mandatory sale on Monday of the OFZs it held on behalf of its clients by National Clearing. Russian Center (NCC).

Artyom Tuzov, executive director of the capital markets department at Univer Capital, said the fall in OFZ prices, which move inversely to yields, triggered margin calls and a shortage of liquidity at home. brokerage accordingly.

“NCC has blocked the trading limit of the company and (…) is selling assets (of our OFZ). The trading limit will be released after the end of the sale (mandatory),” Tuzov told Reuters.

NCC was selling OFZs held by Univer Capital at yields of between 17% and 20% versus the market average of 15% that day, according to an internal Univer Capital memo seen by Reuters and confirmed by Tuzov.

As a result, nearly a hundred Univer customers suffered combined losses of 174 million rubles ($1.7 million), the memo said.

“All of NCC’s operations are aimed at limiting systematic risk so that the issuances of a single brokerage firm do not spill over into the entire market,” the Moscow Stock Exchange, NCC’s parent company, said in a statement.

Unlike banks which are backed by the central bank via repo auctions with trillions of rubles on offer, brokerages do not have access to public funds to replenish liquidity, said Alexei Timofeyev, head of Russian stock market lobby NAUFOR.

“Unfortunately, the repurchase mechanism for brokers which was developed (by the central bank) after 2008 has not entered into force, which puts brokers who are not part of large banking groups in a position worse than lenders,” he said.

Aton and Finam, two other major Russian brokerages, both said they had enough liquidity, but Finam added that a small number of its clients also faced margin calls after the OFZ market reopened.

“Margin calls are inevitable tomorrow (when the stock market reopens), the market has changed dramatically,” NAUFOR’s Timofeyev said, adding that brokerage firms tried to prepare by closing some of their positions.

Trading on the derivatives market with contracts on the Moscow Stock Exchange and individual stocks, included in the index of the Moscow Stock Exchange, will take place from 10 a.m. to 2 p.m. (07:00 a.m. to 11:00 a.m. GMT) in the usual format, announced on Wednesday. the central bank.

He said the trade regime for the following days would be announced at a later date.

($1 = 100.4345 rubles)

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Reuters reporting; Editing by Andrew Heavens, Alison Williams and Hugh Lawson

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