Euroclear and Clearstream shut down settlement of Russian securities

ICSDs take action with both Euroclear and Clearstream no longer accepting rouble as settlement currencies. 

International Central Securities Depositories (ICSD) Euroclear and Clearstream are no longer settling rouble-denominated transactions.

The actions means that the trading, clearing and settlement of Russian securities have now all been impacted by moves from European market infrastructures, dealing a blow to international investors attempting to sell their rouble-denominated assets. This is in addition to many Russian banks being excluded from the SWIFT network due to sanctions. 

Euroclear issued a statement to stakeholders yesterday highlighting that external and Bridge free and against payment settlement of transactions in Russian domestic securities will not be executed until further notice. 

In addition, for internal settlement, Euroclear will no longer accept new internal free or against payment settlement instructions in Russian domestic securities as from the close of business 1 March. 

Euroclear has also disabled its account with ING Bank, its correspondent bank in Moscow. The ICSD had already made the same move with VTB Bank. 

In the statement, Euroclear highlighted that as a consequence of new measures from the Central Bank of the Russian Federation (CBR), the National Settlement Depository (NSD) confirmed that Euroclear’s accounts had been blocked until further notice.  

As a result, all assets held in Euroclear’s account with NSD have been frozen and they are no longer able to process receipt or delivery transactions or corporate actions, including income and redemption events. 

Clearstream made similar moves just before Euroclear, late on Monday this week, announcing the rouble would no longer be an eligible settlement currency. Internal and domestic settlement in all securities held on Clearstream Banking’s Depository were also closed until further notice. 

The Luxembourg-based ICSD added that it would offer no foreign exchange services in RUB until further notice, while the institutions are no longer able to conduct business with Russian banks due to sanctions. 

Latest Global Custodian figures show the two largest ICSDs hold over $60 trillion in assets combined. The impact of their response to the Russian invasion of Ukraine and ensuing sanctions effectively means that foreign investors are essentially stuck with rouble-denominated bonds. 

The moves following action taken by stock exchanges in London and Frankfurt to halt trading in some Russian securities, while the UK has also halted clearing in sterling and dollar for Russian banks.