Moscow Exchange to accept international stocks as collateral
Starting 27 September 2021, National Clearing Centre (NCC, part of Moscow Exchange Group) will accept securities of international companies as collateral for trades made on Moscow Exchange markets.
This will allow professional market participants and their clients more flexibility in funding their operations on MOEX and will facilitate their trading activity.
The list of securities accepted as collateral includes 18 international stocks, which will be expanded in the future.
Earlier this month, NCC was granted the status of Qualified Derivatives Dealer (QDD) by the United States Internal Revenue Service (IRS). QDD status allows Moscow Exchange to facilitate trading in US securities for banks and brokers, as well as on the Money Market. Professional traders will be able to make better use of the margin trading mechanism on MOEX’s Equity Market for their retail clients.
Trading in international shares with settlement in RUB started on Moscow Exchange in August 2020. 281 securities are available for trading. Beginning 27 September 2021, market participants and their clients will be able to trade international shares in US dollars. By the end of the year, the number of international shares is expected to increase to 500. Seventy-six brokers and banks offer their clients to trade international securities on MOEX.
International stocks are currently traded and settled using MOEX’s robust infrastructure, which includes a qualified central counterparty and record-keeping with the central securities depository. Dividends are set in the issuers’ currency, i.e. in USD for American securities.
Individual investors may submit Individual Identification Form W-8BEN, used to calculate the dividend tax payable for U.S. securities. National Settlement Depository (NSD, part of Moscow Exchange Group), will not charge a fee for the acceptance and recognition of Form W-8BEN until the end of January 2022. Form W-8BEN is to be completed by private investors holding US securities to avoid double taxation. When the form is in place, the tax for Russian investors will be 13%: 10% for the United States and 3% for the Russian Federation. If Form W-8BEN is not filed, tax will be withheld at a 30% rate under US law, plus Russian individual income tax will also have to be paid. The signed form is valid for 3 years.