A number of international investment banks have halted trading in Russian equities following the country’s invasion of Ukraine on Thursday.
JP Morgan, Goldman Sachs, Citigroup, Morgan Stanley, Bank of America, HSBC and UBS have all stopped trading locally listed Russian stocks, according to sources familiar with the matter. Spokespeople for all of the banks declined to comment.
Russian stock markets have swung wildly over the past two days. The benchmark MOEX Russia index plunged a record 33% on Thursday after Russian president Vladimir Putin ordered the attack on Ukraine, before rebounding about 20% on Friday.
The stock-trading pull-back underscores the caution among international banks following Russia’s military assault on Ukraine, with one source indicating the decision came from senior management due to concerns over sanctions.
Even though Western governments have stopped short so far of explicitly banning trading in most Russian assets, the US has looked to cut off Russian banks from much of the US financial system by levying sanctions on its largest lenders, including Sberbank and VTB. Such a move makes it harder for Western financial institutions to trade Russian assets given that many will use local brokers to connect to onshore Russian markets such as the Moscow Exchange.
European post-trade group Clearstream told clients on Thursday that it will no longer settle trades in Russian roubles because of the sanctions.
Most banks are still trading depository receipts on Russian companies that are not subject to sanctions, sources said, but won't trade DRs on the likes of Sberbank and VTB. Listing GDRs in London or ADRs on US exchanges is an established way for Russian companies to access a wide pool of international investors, including those that do not typically invest in emerging market stocks.
Additional reporting by Robert Venes and Owen Wild