Industry Updates

DWS suspends creations-redemptions on Russia ETF

Following HSBC’s move to suspend trading yesterday

Theo Andrew

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DWS has suspended primary market trading on its Russia ETF on as the Moscow Stock Exchange continues to remain closed following the economic sanctions imposed on Russia by the western governments.

In a market announcement, DWS said it would be suspending the issue and redemption of shares on the £37m Xtrackers MSCI Russia Capped Swap UCITS ETF (XMRD) as liquidity in the Russian market dries up.

The Moscow Stock Exchange remains closed on Tuesday, however, XMRD is down 7.6% so far, as at 1.15pm today.

Yesterday, HSBC Asset Management announced a "non-dealing day" for the HSBC MSCI Russia Capped UCITS ETF (HRUB), suspending trading on primary markets while still allowing the net asset value of the ETF to be published.

In a notice to shareholders, DWS said: “The company has decided to suspend the determination of the NAV and the issue and redemption of shares as well as the right to convert shares of the sub-fund.

“This is because there exists a state of affairs which, in the opinion of the board of directors, renders impracticable, a disposal or valuation of the assets attributable to the sub-fund.

“The board of directors therefore resolved that it is in the best interest of the shareholders to suspend the NAV calculation and hence the issue and redemption of shares as well as the right to convert shares of the sub-fund during the suspension period.”

DWS added shareholders will be notified accordingly on any developments including the lifting of the suspension.

It follows an announcement by index provider MSCI yesterday that 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.

Russia stocks have been impacted by a string of sanctions in retaliation to President Vladimir Putin’s decision to invade Ukraine last Thursday.

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