AO UniCredit Bank would like to raise the clients’ awareness of the specifics of settlement and asset servicing procedures applied to a particular Russian ISIN - RU000A1025V3 (RUSAL ordinary shares). Please be advised that this issue is currently split in two lines:
- “RU line” (shown in MT535 statements as /XX/CORP/NADC/RU000A1025V3) – shares traded via the Moscow Exchange;
- “HK line” (shown in MT535 statements as /XX/CORP/NADC/224072805) – shares traded via the Hong Kong Stock Exchange.
NSD (Russian CSD) currently allows market participants to keep both lines of this ISIN in its books. RU line is held via the NSD’s account with a Russian registrar; HK line is kept via NSD’s account at Euroclear.
As the two lines exist under the same ISIN but have two different depository codes, clients are kindly requested to populate fields 35B in their SWIFT MT54X instructions for the receipt/delivery of RUSAL ordinary shares as follows:
RU line:
:35B:ISIN RU000A1025V3
/XX/CORP/NADC/RU000A1025V3
OK RUSAL, COMMON
HK line:
:35B:ISIN RU000A1025V3
/XX/CORP/NADC/224072805
OK RUSAL, COMMON
Proper indication of the depository code in the field 35B allows to increase the settlement efficiency and thus reduce the potential operational risks. If this field is not populated correctly, a client has to send us an MT599 message (in addition to the MT54X instruction) each time RUSAL ordinary shares are being received/delivered in order to clarify which line is implied, which might result in settlement delays and deterioration of the STP rates.
We would also like to bring to your attention that safekeeping of the HK line via the Russian securities market infrastructure is associated with certain constraints in trades settlement and asset servicing, in particular the following limitations are imposed by NSD with respect to the HK line:
- NSD’s settlement services are limited to the delivery of the HK line via debiting NSD’s account at Euroclear;
- Corporate actions for the HK line are handled by NSD to the extent they are supported by Euroclear. Based on our previous experience, market deadlines for the HK line may be substantially shorter than for the RU line, as this position is kept via a longer chain of settlement depositories.
Please note that the HK line may be converted into the RU line at the investor’s discretion (additional details on the conversion procedure can be provided at the client’s request).
Should you need any assistance with the matters described in this newsflash, please do not hesitate to contact your GSS relationship manager at AO UniCredit Bank.
Impact on investors: Clients, that keep and settle RUSAL ordinary shares in the books of AO UniCredit Bank should modify the formats of their RUSAL settlement instructions as described above and consider the limitations associated with the safekeeping of the HK line via the Russian securities market infrastructure.