Bank of Russia identifies patterns in pricing quasi-Russian issuer securities
Bank of Russia notes a significant difference between prices for depositary receipts of quasi-Russian companies in on-exchange and OTC markets. Sometimes, OTC transactions in these instruments may be made at discounts of up to 50%.
Higher demand for such securities among investors may be caused by companies’ plans to re-domicile in Russia. In this case, they will get the status of an international company and will be obliged to convert their depositary receipts into shares, which may be freely traded in the Russian market (unless otherwise specified in law).
According to the Bank of Russia, the transfer of securities from OTC to on-exchange trading may cause volatility in the market because of higher supply. The regulator finds it necessary for investors to consider various risks when investing in shares and depositary receipts of quasi-Russian companies.