Industry Updates

BlackRock and Invesco latest to suspend primary market trading on Russia ETFs

The suspension follows similar moves by DWS

Theo Andrew

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BlackRock and Invesco have become the latest issuers to suspend primary market trading on its Russia ETFs due to the ongoing market disruption created by the Russian invasion of Ukraine.

In an announcement, BlackRock said it was suspending primary market trading on two ETFs, the $43m iShares MSCI Russia ADR/GDR UCITS ETF (CSRU) and the $51m iShares MSCI Eastern Europe Capped UCITS ETF (IEER) while Invesco said it had taken the same measures on the Invesco RDX UCITS ETF (RDXS).

All creations and redemptions will be suspended on the three ETFs “until further notice” with trading still available on secondary markets. CRSU is currently trading at a 111% premium to its net asset value (NAV).

It follows the decision by BlackRock to halt creations on the US version of its Russia ETF yesterday.

BlackRock and Invesco follow DWS which suspended primary market trading on its Xtrackers MSCI Russia Capped Swap UCITS ETF (XMRD) yesterday.

HSBC announced non-dealing days for its Russa ETF, the HSBC MSCI Russia Capped UCITS ETF (HRUB), on Monday and Tuesday.

Both said the decision was made due to the escalating conflict in Ukraine and the impact the West’s sanctions were having on the Russian economy, severely impacting the liquidity of the country’s stock market.

The Moscow Stock Exchange has remained closed since Monday when the brunt of the sanctions hit.

BlackRock said: “Due to the escalating conflict between Russia and the Ukraine, normal market trading conditions have been materially impaired, and a significant portion of the fund's portfolio is not currently tradeable.

“As a result, disposal and valuation of a significant portfolio of investments of the fund have become impracticable.”

Invesco added the move was also made after the emergency committee at the Vienna Stock Exchange decided to suspend all indices containing Russian securities.

Index providers have been rushing to understand the impact the wall of sanctions are having on their indices since they were imposed.

On Monday, MSCI said the Russian market is currently “uninvestable”, adding that a blanket removal of Russian securities from its indices was a “potential next step”.

The restriction on trading Russian securities means that index providers will no longer be able to provide the minimum liquidity requirements required for their inclusion in benchmarks.

JP Morgan is also considering the removal of Russia from its emerging market debt ESG indices and could see sanctioned bonds and issuers removed from its indices altogether.

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