Limited Russian bond trading allowed after US approval - Reuters
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Large Wall Street firms are cautiously returning to the market for Russian government and corporate bonds.
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Large Wall Street firms have cautiously returned to the market for the Russian government and corporate bonds after Treasury guidelines gave them permission (Getty Images)
The US Treasury Department banned US investors from Russian security purchases back in June as part of an economic sanctions package against Russia. On Monday, Reuters reported obtaining bank documents revealing the fact that many big Wall Street banks have recently begun offering to arrange deals in Russian debt, providing investors another opportunity to dispose of Russian assets.
Large Wall Street firms have cautiously returned to the market for Russian government and corporate bonds after new Treasury guidelines, subsequently released in July, permitted US holders to tone down their positions. This information was obtained by Reuters via emails, client notes, and various contacts from six banks.
According to the documents, the banks that have joined this market are Bank of America Corp, Citigroup, JPMorgan Chase & Co, Barclays Plc, Deutsche Bank, and Jefferies Financial Group Inc.
Information about the works of the banks on how to maneuver the new guidelines without breaching any sanction was reported, for the first time, by Reuters.
For example, based on a source close to Deutsche Bank, the bank trades bonds for customers on a request-only and case-by-case basis in order to better manage its Russia risk exposure or those of its non-US clients, but it will not undertake any new business outside of these two categories.
The banks' approaches to the US Treasury guidelines differ. While some are providing customers assistance in divesting their holdings as well as other forms of trading that would minimize exposure to Russian assets in certain situations, others limit trades to asset disposals alone.
According to Reuters, banks sometimes require investors to sign paperwork prior to trade execution that allow the banks to cancel deals if settlement does not go through and risks leaving the banks with Russian paper on their books.
Read more: Economy needs 1.5 years to adjust to sanctions: Russian Central Bank
