Russia will restrict retail investors from buying foreign shares from 'unfriendly' countries that have sanctioned the nation

Russian President Vladimir Putin.

Sergey Bobylev/TASS Host Photo Agency/Handout via REUTERS

• Russia's central bank will start limiting access by retail investors seeking to purchase securities in companies in "unfriendly countries." 
• Russia said it's aiming to minimize risks faced by retail investors as millions of them have had assets frozen because of Western sanctions. 
• Brokerages will start restricting access beginning on October 1. 

Russia's central bank will start putting restrictions on retail investors' purchases of securities in companies from countries that have imposed sanctions against Moscow for its war on Ukraine. 

The Bank of Russia said Tuesday the move is aimed at mitigating risks for retail investors. Western sanctions led to millions of Russian investors seeing their holdings in foreign securities frozen. 

Starting on October 1, brokerages will no longer execute orders from non-qualified investors to buy securities from "unfriendly countries" if their portion of a portfolio exceeds 15%, the bank said in a statement Tuesday. 

The threshold will be lowered to 10% of a customer's portfolio on November 1, and to 5% on December 1. Beginning on January 1, brokers must suspend any orders from retail investors seeking to increase their stakes in foreign issuers from unfriendly countries. 

"This decision is aimed at minimizing the infrastructure risks faced by non-qualified investors, since foreign financial institutions maintaining the record of such securities may block the opportunity to dispose of purchased assets without any warning," the Bank of Russia said. 

"Over five million investors have already become victims of such blocking. It is very difficult to protect the rights of holders of these securities after the fact, as the solution of the problem is beyond the scope of Russian jurisdiction." 

As of July, 48 countries were on Russia's list of unfriendly countries including the US, European Union nations, Canada, and Japan. 

Russians held roughly $14 billion in US-listed shares as of the end of March, Reuters reported, citing the central bank. The Bank of Russia had also estimated sanctions on Russia's National Settlement Depository froze access to about 320 billion rubles ($5.26 billion) in foreign shares, the report said.

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