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How to Convert Russian ADRs/GDRs to Local Shares?

Conor Scott, CFA| Updated January 26th, 2023

[Update 21/01/2023: This article is devoted to the Russian ADRs and GDRs Issue, started in February 2022.
Thanks to one of Europe’s leading investment companies, Freedom24 broker, more than 6 000 European investors were able to convert the assets for more than 100,000,000 EUR in 2022. In December 2022, Euroclear paused the conversion for the Russian ADRs and GDR. The article will be updated as soon as the news from Euroclear, and Freedom24 is received. If you are interested in details, please find the information below].

The major European clearinghouse and settlement agency Euroclear extended the deadline for converting Russian ADRs and GDRs (non-sanctioned) into equivalent local stocks up to December 23, 2022, depending on your own Russian ADR. 

This announcement gives holders the right to transfer their Russian ADRs, such as Gazprom ADRs or Rosneft ADRs, currently toxic assets, to local stocks that could be redeemable in the future. 

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 viable for converting into local stocks through certain non-Russian client brokerage accounts until December 23rd. 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: 

  1. 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)
  2. Initiate the transfer of securities by emailing the list of securities plus ISINs (international securities identification codes) to the appropriate address; for example, info@freedomfinance.eu
    • 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
  3. From the ongoing bank or broker which currently custodies your Russian ADRs or GDRs, submit an outgoing transfer order in favour of Freedom24
  4. 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:

  1. Not all brokers can convert Russian ADRs or GDRs to local equivalents
  2. 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)
  3. The conversion process no longer requires a Russian broker or custodian
  4. The deadline for converting ADRs or GDRs, such as convert Gazprom ADR to ordinary shares, remains until December 23rd (other companies may have different deadlines).

About Freedom24 – the Broker to Convert Your Russian ADRs and GDRs

# Freedom24

How to Convert Russian ADRs/GDRs to Local Shares? 2
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Freedom24 at a glance

Russian ADR/GDR Conversion Fee3% of the local share value, min: $50
ProductsStocks, ETFs, Bonds, Futures and Options, new shares at initial (IPO) price
Minimum Deposit€/$0
RegulatorsCySEC, BaFin and SEC

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 (such as Gazprom) 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)
US50218G2066 RU000A0JPFP0 LSR GROUP PJSC REG S GDR LSRG LI Equity 23 Jan 2023 – 16:30
US6708482095 RU000A0JNG55 JSC OGK-2 – GDR REGS GDR OGK2 LI Equity 23 Jan 2023 – 16:30
US5838407071 RU000A0DKXV5 MECHEL PAO GDR MECHEL PAO 23 Jan 2023 – 16:30
US5838405091 RU000A0JPV70 MECHEL PAO PFD ADR ADR MECHEL PAO PFD ADR 23 Jan 2023 – 16:30
US00501T2096 RU0009028674 PJSC ACRON – REGS GDR GDR AKRN LI Equity 23 Jan 2023 – 16:30
US5838406081 RU000A0DKXV5 MECHEL, PAO – ADR ADR MTL US Equity 23 Jan 2023 – 16:30
US6074091090 RU0007775219 MOBILE TELESYSTEMS PJSC ADR ADR MBT US Equity 23 Jan 2023 – 16:30
US67011E2046 RU0009046452 NOVOLIPETSK STEEL (NLMK)(REGS GDR) GDR NLMK LI Equity 23 Jan 2023 – 16:30
US69343P1057 RU0009024277 LUKOIL PJSC-ADR ADR LUKOIL PJSC 23 Jan 2023 – 16:30
US29355E2081 RU000A100K72 EN+ GROUP IPJSC DR EN+ GROUP IPJSC 23 Jan 2023 – 16:30
US8766292051 RU0009033591 TATNEFT-ADR ADR Tatneft PJSC 23 Jan 2023 – 16:30
US55953Q2021 RU000A0JRKT8 MAGNIT PJSC-SPON GDR Magnit PJSC 23 Jan 2023 – 16:30
US7785291078 RU000A0JKQU8 ROSTELECOM-ADR ADR Rostelecom PJSC 23 Jan 2023 – 16:30

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 we mentioned earlier, holders of Gazprom ADRs can 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 December 23rd, 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.

Other FAQs

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 December 23rd, 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.

Conor Scott, CFA
Contributor

Conor is a CFA charterholder who has been active in the wealth management industry since 2012, continuously researching the latest developments affecting portfolio management and cryptocurrency.

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