Investors may choose where to transfer yield on securities: regulator’s clarifications
The Bank of Russia recommends that brokers and depositories enable clients to choose an account to receive their yield on securities — a brokerage account or directly a bank account. As clarified by the regulator, investors have this right pursuant to the law on the securities market.
Generally, depositories unilaterally stipulate in contracts that yield on securities should be credited to special brokerage accounts when funds are invested through brokerage accounts or individual investment accounts (IIAs) serviced by brokers. As a result, clients cannot receive coupons and dividends directly to their bank accounts — to do this, they need to either withdraw funds from their brokerage accounts paying a fee, or close their IIAs. If clients have such an option, this will help protect their rights and make IIAs more convenient for long-term investment.
The Bank of Russia also explained that the law does not prohibit brokers and managers to make repayments to clients in foreign currencies where IIAs are closed. Market participants had no common understanding of this issue, with a part of them avoiding repayments in a foreign currency and converting them into rubles when closing IIAs.