OFZ holders are expiring the deadline for their transfer from foreign depositories

OFZ holders are expiring the deadline for their transfer from foreign depositories.

Holders of Russian federal loan bonds (OFZ for short) must submit all the necessary documents to transfer them to Russia by October 11, 2022. Otherwise, it will be impossible to receive income from them. The rule applies to all OFZs with an INIS code starting with RU. In particular, it is relevant for OFZ purchasers abroad in the Euroclear circuit at a low cost in order to transfer them to Russia and sell them in the circuit of the national settlement depository (abbreviated as NSD) with a significant "cheat".

Transfer obligations are established by Federal Law-319 dated July 14, 2022. It actually introduces a rule on the forced transfer of Russian securities from foreign depositories. Formally, the law establishes the right of OFZ holders to change the place of their registration, if they are currently accounted for in foreign depositories. At the end of the forced deconversion procedure, Russian securities are likely to seriously lose value. Therefore, it will not be possible to implement them without losses. It will be problematic to receive income from assets stuck in Euroclear, since all OFZ payments are currently made only within the domestic infrastructure in the national currency.

To transfer, it is enough to submit an application to NSD with proof of ownership of bonds in a certain amount. The application is drawn up in free form, the list of documents is established by NSD in a special order, which is posted on its official website. There you can also find requirements for the content and execution of supporting documents. Thus, the holders of securities must provide an apostilled and translated into Russian extract from Euroclear (foreign depository). There is no need to translate the document from English. At the same time, it is currently noted that Euroclear refuses to issue statements for securities with an INIS code starting with RU. That is, it may take time to collect the necessary document package.

The deadline for submitting documents to NSD cannot be extended or restored. After 10 days after the expiration of the period established by law, the transfer will begin on the applications received, the rest of the OFZs will be stuck with foreign depositories. You can find out where the bonds are stored from the broker who purchased the securities for the owner. Bonds of Russian companies cannot be returned to NSD under this procedure; it is relevant only for federal loan bonds.

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