The exchange of 'blocked' funds by Euroclear

The article published by Reuters yesterday raised some questions by some members.

In this post we'll try to explain the situation. 

On 19 March 2024, the President of the Russian Federation signed Decree No. 198 “On additional temporary measures of economic nature related to the performance of obligations under certain securities” (“Decree 198”): https://www.consultant.ru/document/cons_doc_LAW_472406/ 

Decree 198 establishes the procedure for receiving securities related payments owed to certain categories of holders from funds blocked in Type C accounts of nominee holders such as Clearstream and Euroclear.

Article 9 of Decree 198 sets out what the Central Securities Depository (National Settlement Depository, NSD) has to do to have its obligations to international securities settlement systems duly performed under Russian law. 

NSD waived its rights to an equivalent amount of balances on its accounts with Euroclear and Clearstream Banking, which remained blocked under EU sanctions.

Then the EU changed the sanctions legislation to allow for the unblocking of these funds for which the ownership rights were 'waived' by NSD: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32024R3189 

In Clearstream's audit report (https://www.clearstream.com/resource/blob/1317842/96440fcf7b24b5637ffbda59fc52edf3/cbl-annual-account-data.pdf) this has been explained on page 12 as follows:

"On 23 August 2024, Clearstream Banking S.A. informed its customers that on 15 August 2024, the NSD had debited the Bank’s cash balances under Russian Presidential Decree No. 198 and its accounts were brought to zero. NSD waived its rights to an equivalent amount of balances on its accounts with Clearstream Banking S.A., which remained blocked under EU sanctions. On 14 February 2025, the Bank informed its customers that it had received the authorisation of its National Competent Authority to unfreeze the balances to which NSD had waived its rights. Accordingly, it has offered its customers compensation for the balances seized in Russia. The Bank’s affected customers are entitled to USD 368 million in full and final settlement of their entitlement to RUB 34.1 billion. The compensation had the effect of making Clearstream Banking S.A. again liable to its customers resulting in a write on of the corresponding amounts to its balance sheet as a subsequent event."

Already in the beginning of April, Russian newspapers reported on the permission Euroclear had received to unblock these funds: https://www.vedomosti.ru/investments/articles/2025/04/03/1102008-zarubezhnie-investori-poluchat-kompensatsiyu

It apparently took some time before this was picked up by Western media.