St. Petersburg Exchange came under US sanctions - client assets are at risk

Sanctions were imposed by the United States on St. Petersburg Exchange and an additional 200 organizations.

US shares belonging to clients may be frozen in the US.

The trading of foreign securities has been put on hold for the time being.

Trading at the St. Petersburg Exchange was suspended on November 3.

On Thursday, the trading platform's shares experienced a dramatic decrease of nearly 23%.

The US Treasury Department's Office of Foreign Assets Control (OFAC) updated its SDN-list on Thursday, which revealed that the St. Petersburg Exchange is now under blocking US sanctions.

More than 30 individuals and 200 legal entities, including St. Petersburg Exchange, AFK Sistema, Russian Standard, Home Credit, Post Bank, Absolut Bank, and the All-Russian Regional Development Bank (RRDB), were subject to restrictions.

RBC reports that the St. Petersburg Exchange's primary activity is trading in American stocks. On the platform, investors can access over 2 thousand stocks and depositary receipts of international companies, as well as ETF securities.

Being included on the SDN list results in being isolated from the dollar system, having assets blocked, and being prohibited from collaborating with American companies.

Trading at the St. Petersburg Exchange was suspended at 6 pm Moscow time on Thursday and remained canceled on Friday. The Exchange has promised to resume trading on Monday.

Where the exchange kept its securities and who was the depository will now be of great importance, as the St. Petersburg Exchange itself did not store assets; it only conducted transactions.

The risk of American assets being blocked in the St. Petersburg Exchange's depository is likely, as the National Settlement Depository (NSD, part of the Moscow Exchange group) had experienced similar OFAC sanctions before.

Investment banker Evgeniy Kogan warned that if the exchange held securities "with American brokers," the assets would be frozen. He emphasized that "we have said many times that if you want to trade foreign securities, it is better to trade through foreign brokers, it will be safer."