Russian Central Bank Lifts Barriers for ETF

New rules will enter into force in 2022

According to the Bank of Russia’s press service, local investors will get an opportunity to trade with shares of the biggest international exchange-traded funds (ETF) starting from 2022.

As the regulator noted, the yields of foreign ETFs shares that will be traded on Russian stock exchanges should be determined by any index from the list of Bank of Russia or another foreign stock index.

“A stock exchange will be obliged to engage a market maker, who will be responsible for the determination of trading volumes and set a fair price of these shares,” the regulator’s press service reported.

Another rule is differentiated requirements to the average value of net assets of ETFs over the last three months depending on the type of listing. If a fund has a contract with a stock exchange, this rate should be not less than $334,416; if there is no such agreement – no less than $1,337,657,663.

“We’ve put these high thresholds for so-called non-sponsored listings with an intention to prevent small, high-risk foreign ETFs from entering the Russian stock exchanges,” the Bank of Russia said.

On the other hand, the regulator has approved the cancellation of two other requirements; this rule will enter into force on April 1, 2022.

“First of all, a foreign ETF will not be required to reflect any specific Russian stock exchange in its public information. The second, we won’t require to include any Russian broker into the list of authorized actors, who will be involved in the deals with ETF’s securities acquiring,” the bank said in its statement.

The Bank of Russia hopes that all these measures will help attract big funds with high-quality assets to the Russian market.

To make all these changes work, the central bank has prepared some amendments to the regulation on the access of the stocks to organized trading activities. They describe an order of listing and delisting of foreign ETFs and some other technical nuances.

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