Industry Updates

BlackRock terminates ‘untradeable’ Russia and eastern Europe ETFs

It becomes the first issuer to shutter its Russia ETFs

Theo Andrew

a red and white ball in a net

BlackRock has become the first issuer to terminate its Russia and eastern Europe ETFs following Moscow’s invasion of Ukraine and subsequent collapse of the country’s economy.

In a shareholder notice, the world’s largest asset manager said it would be closing the iShares MSCI Eastern Europe Capped UCITS ETF (IEER) and the iShares MSCI Russia ADR/GDR UCITS ETF (CSRU).

BlackRock had already suspended the creation and redemption process of the ETFs shortly after the war commenced. The ETFs were then later suspended on the secondary market on exchange.

As a result, the issuer said it would like to return the proceeds of the ETFs securities to investors “if any value can be realised”.

In a statement, BlackRock said: “Due to Russia’s invasion of Ukraine, normal market trading conditions have remained materially impaired, and a significant portion of Russian securities are still not currently tradeable for non-Russian foreign investors. 

“As a result, BlackRock believes it is acting in the interests of shareholders by closing IEER and CSRU.

“BlackRock would like to protect the value of the funds’ Russian security holdings by making disposals in an orderly and managed way so as to try and return proceeds to Shareholders if any value can be realised.

“The Russian securities will therefore remain in the funds until such time as it is possible, practicable and appropriate, in the manager’s view, to liquidate each of the positions in an orderly and managed way.”

In March, BlackRock said it was waiving the fees of IEER and CSRU considering the “extraordinary market circumstances”.

The ETFs vary widely in their exposure to Russia, CSRU has significant exposure to depository receipts, which are US or Europe-listed securities that represent ownership of underlying shares in the company, many of which have seen trading suspended on exchanges throughout Europe.

Meanwhile, the IEER holds the securities on the Moscow Stock Exchange (MOEX) which has been closed since 25 February.

Earlier this month, the UK revoked the MOEX status as a recognised stock exchange, which has placed restrictions on foreign investors since 28 February.

In April, Larry Fink, BlackRock CEO said the Russian invasion of Ukraine has put an end to the globalisation we have experienced over the last three decades.

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