The major European clearinghouse and settlement agency Euroclear is accepting the conversion of Russian ADRs and GDRs (non-sanctioned) into equivalent local stocks up to June 30, 2023, depending on your own Russian ADR. Please find detailed information here.
This announcement gives holders the right to transfer their Russian ADRs, such as Rosneft ADRs and Magnit ADRs, currently toxic assets, to local stocks that could be redeemable in the future (Gazprom ADRs are no longer accepted for conversion).
In this article, we’ll dive deep into how you can convert or transfer your Russian ADRs and GDRs using one of Europe’s leading brokers, Freedom24.
The Issue With Russian ADRs
- Following the war in Ukraine from February 24th onwards, the Russian government decided to remove all listings of firms registered in Russia from foreign exchanges. This translates into Russian ADRs (American Depositary Receipts) or GDRs (Global Depositary Receipts).
- The most common problem facing investors is how to convert/transfer their Russian ADRs into valid local stocks.
- Non-sanctioned Russian ADRs or GDRs are still viable for converting into local stocks through certain non-Russian client brokerage accounts. Previously, Russian law generally required a Russian custodial (share) account to facilitate the conversion process.
How to Exchange Your Russian ADRs and GDRs for Local Shares
Not all online, non-Russian brokerages enable the conversions of depositary receipts. Freedom24 is a leading European exchange facilitating this process.
Using Freedom24 as an example, the procedure for converting looks like this:
- Open an account, and include:
- An identity card or passport
- Proof of address, such as a bank statement or utility bill
- A selfie (self-photo)
- A basic financial profile
- Your tax ID (taxpayer identification number)
- Initiate the transfer of securities by emailing the list of securities plus ISINs (international securities identification codes) to the appropriate address; for example, email@example.com
- Depending on the securities, provide an additional source of income information at the request of the broker
- Follow the instructions provided by your broker to deposit the assets
- From the ongoing bank or broker which currently custodies your Russian ADRs or GDRs, submit an outgoing transfer order in favour of Freedom24
- Convert the newly received ADRs or GDRs to local Russian stocks following the broker’s instructions by the final deadline of December 23rd, depending on each Russian ADR.
To recap, there are four key points to note:
- Not all brokers can convert Russian ADRs or GDRs to local equivalents
- For those brokers which can require an outgoing transfer from your existing broker; instructions are provided per broker, but much is done through email (like above)
- The conversion process no longer requires a Russian broker or custodian
- The deadline for converting ADRs or GDRs to ordinary shares remains until June 30, 2023.
About Freedom24 – the Broker to Convert Your Russian ADRs and GDRs
Freedom24 at a glance
Founded in 2008, Freedom24 is a European broker known for its exclusive feature of IPO subscriptions. They let you trade newly listed US, EU, and Asian companies at IPO prices, in addition to thousands of trading instruments, including stocks, ETFs, bonds, futures, and options on major global exchanges. They do not have a minimum deposit for general trading and have very low commissions on stock and ETF trading. On the downside, they charge a €7 fee per withdrawal.
Customers choose one of the various service plans on offer that fit their currency needs, trading styles, and investor goals. The plan selection tool, such as for “Smart,” seeks to balance options with trading costs and provide something for everyone.
After registration, customers benefit from the broker’s promotion of 0% commission in the first 30 days. Further, if any new customer transfers €20,000 or more in stocks from any other European broker, they receive €200 in free bonus points–which can directly offset future trading fees.
Another helpful tools for beginning (and experienced) traders are the InvestIdeas blog from award-winning Freedom24 securities analysts, which includes actual recommendations and financial forecasts.
The conversion fee for converting Russian ADRs and GDRs (Gazprom ADR conversion is no longer possible) is 3% of the value of the local share equivalent at the close of the day on July 18, 2022, with a minimum fee of $50.
If you want to learn more, check our Freedom24 Review.
Russian ADRs That Can Be Converted To Regular Shares
Below are the major Russian ADRs that can be converted to regular shares with Freedom24:
|ISIN||Local shares||Short Name||Type||Ticker/Name||Deadline (CET)|
|US55953Q2021||RU000A0JRKT8||MAGNIT PJSC-SPON||GDR||Magnit PJSC||30 Jun 2023|
|US6074091090||RU0007775219||MOBILE TELESYSTEMS PJSC ADR||ADR||MBT US Equity||30 Jun 2023|
|ROSNEFT PJSC||GDR||ROSN ME||30 Jun 2023|
|US67011U2087||RU0009084446||NOVOROSSIYSK COMMERCIAL SEA PORT||GDR||NMTP||30 Jun 2023|
|US1641452032||RU000A1013Y3||CHERKIZOVO GROUP PJSC||GDR||GCHE||30 Jun 2023|
|US69338N2062||RU000A0JP7J7||PIK GROUP PJSC||GDR||PIKK||30 Jun 2023|
|US45835N1054||RU000A0JPNM1||INTER RAO UES PJSC||GDR||IRAO||30 Jun 2023|
|US69343X2071||RU000A0JPVK8||ROSSETI PJSC||GDR||MRKH||30 Jun 2023|
Convert Gazprom ADRs (OGZPY) to Gazprom Stock
Founded in 1989, Gazprom PJSC is an energy company focusing on geological exploration, production, transportation, storage, processing, and sales of gas and oil and the generation of heat and electric power. The company is a major supplier of gas to Europe, as well as to other international countries.
As announced last May, the Russian energy giant has decided to discontinue its ADR program. As of February 4th, 2023, holders of Gazprom ADRs cannot convert them to ordinary shares or receive payment of sale proceeds if the Depositary sold your shares.
The Bottom Line
Freedom24 is currently the only major European brokerage to facilitate the conversion of Russian ADRs and GDRs. While we hope for a swift end to the war in Ukraine, we understand some investors historically held positions in major Russian firms, like Gazprom, Rosneft Oil, Mobile Telesystems, and Pao Novatek.
Depositary receipt holders should decide if they need to convert their Russian ADRs to local shares, as Russian companies are obliged to delist their ADRs and stop offering depository programs on foreign exchanges.
The deadline to convert the toxic depositary receipt assets is June 30, depending on your Russian ADR. Failing to convert beyond this point may make it difficult or impossible to redeem the value of your holdings.
Lastly, it’s important to remember that investments in securities and other financial instruments always involve the risk of losing your capital.
Who is eligible to request a conversion?
Anybody who could open an account with Freedom24 and send the necessary security details per Freedom24’s instructions.
What is the usual timeframe for the conversion process?
This generally depends upon the current workload of Freedom24 and how quickly you may send the relevant security details. A good rule of thumb for most security transfers is 2-3 weeks, but each account transfer is unique.
What is the deadline to convert Russian ADRs to ordinary shares?
The deadline to convert is June 30, depending on your Russian ADR. Please try to start the conversion process as soon as possible.
Why is it important to convert Russian ADRs and GDRs?
Because if they are not converted, they expire, and you lose your capital. On the other hand, stocks belong to you in perpetuity.
Will I be able to sell the received stock immediately after converting?
No, the stock cannot be sold now as it is kept in Russia’s national depositary. You will be able to sell these stocks when the sanctions are removed from the national depositary.
How to request a conversion of Russian ADR and GDR if I live in the US? 🇺🇸
Since Freedom24 is not available in the US, we suggest that you contact your broker and check if they can proceed with the conversion request.
How to request a conversion of Russian ADR and GDR if I live in the UK? 🇬🇧
Since Freedom24 is not available in the UK, we suggest that you contact your broker and check if they can proceed with the conversion request.