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Russia central bank proposes banning small investors from buying foreign shares

Russia central bank takes a step to protect investors after Western sanctions left them with billions of dollars in frozen accounts


Russia central bank proposes banning small investors from buying foreign shares

MOSCOW, July 20 (Reuters) - Russia's central bank has proposed banning Russians with holdings worth less than $550,000 from buying foreign shares, as a step to protect investors after Western sanctions left them with billions of dollars in frozen accounts. Russia has had a retail investment boom since the COVID-19 pandemic, with small players seeking to make money amid a record number of domestic share flotations and low deposit rates.

Many Russians bought foreign shares using accounts now frozen under Western sanctions. This sanction was imposed after Russia sent tens of thousands of troops into Ukraine on February 24th. The  Central Bank Deputy Chairman Philip Gabunia said more than 5 million people in Russia have foreign stocks in frozen accounts, worth a combined value of more than 320 billion roubles ($5.84 billion).

Russia's second-largest bourse, SPB Exchange, which specializes in foreign shares, said up to 14% of U.S.-listed shares held by its clients should be transferred to a non-trading account in the month of May due to restrictions imposed by Brussels-based depository Euroclear. Seeking to minimize future risks for retail investors, Russia's central bank has already reduced the maximum leverage it can use.

New restrictions would tighten the requirements to obtain qualified status to buy foreign shares, Gabunia told a media briefing. In addition to requiring investors to have holdings worth more than 30 million roubles ($550,000), the change would also require them to pass a knowledge test.

Source: https://www.reuters.com/markets/europe/russia-central-bank-proposes-banning-small-investors-buying-foreign-shares-2022-07-20/

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