Trading in a handful of Russia-related exchange-traded funds were halted indefinitely on Friday by the NYSE Arca and CBOE BZX exchanges, citing “regulatory concern.”
The halts come as sanctions imposed on Russia in the wake of the country’s invasion of Ukraine last week has led to the closing of the Russian stock market and volatility in other Russian and global financial markets. Read more about cracks in the ETF complex in MarketWatch’s “ETF Wrap” column.
NYSE Arca, which boasts being the “top” U.S. exchange for ETFs, said the iShares MSCI Russia ETF
the Franklin FTSE Russia ETF
and the Direxion Daily Russia 2X Shares ETF
were all halted as of 3:54 a.m. Eastern.
NYSE Arca, as well as the New York Stock Exchange, is owned by Intercontinental Exchange Inc.
Earlier Friday, BlackRock Inc.
the investment manager that manages the iShares MSCI Russia ETF (ERUS), said it supported NYSE Arca’s decision to halt trading in the ETF. BlackRock’s stock sank 5.0% to a one-year low close of $696.59 on Friday, while the S&P 500 index
“Due to ERUS’ concentrated exposure to Russian equities, the closure of the Russian stock market and MSCI’s decision to remove Russian securities from its Emerging Markets Indexes, BlackRock strongly supports NYSE Arca’s decision and is committed to protecting the best interests of ERUS shareholders,” BlackRock said in a statement.
ERUS had plummeted 72.8% since Russia’s invasion started on Feb. 24 through Thursday, when it closed at a record low of $8.06. That followed MSCI Inc.’s
reclassification of its Russian indexes to “standalone markets” status from “emerging markets,” saying that Russian stocks were “uninvestable.”
Also on Thursday, Direxion said its Direxion Daily Russia Bull 2X ETF would eliminate all exposure to the market, and instead have all of its assets held in cash. The ETF, which sought results of 200% of the performance of the MVIS Russia Index, had plummeted 75.2% since the invasion started to Thursday’s record-low close of $2.58.
The Franklin FTSE Russia ETF, which is managed by Franklin Resources Inc.’s
Franklin Templeton, had tumbled 57.2% since the invasion began to close Thursday at a record low of $9.10.
“Franklin Templeton supports NYSE Arca’s decision, given FLRU’s concentrated exposure to Russia and challenges such as the closure of the country’s securities market and its capital controls,” Franklin Templeton said in a statement.
And after Friday’s close, at 4:20 p.m. Eastern, CBOE Global Markets Inc.’s
CBOE BZX exchange halted trading in the VanEck Russia ETF
and the VanEck Russia Small-Cap ETF
indefinitely, also citing “regulatory concern.”
The VanEck Russia ETF (RSX) fell 2.4% on Friday to close at $5.65, which was 70.3% below where it closed on Feb. 23, while the VanEck Russia Small-Cap ETF (RSXJ) tumbled 21.1% to $11.24, or 55.8% below where it was before Russia’s invasion began. Both ETFs closed Friday at record lows.
Among the RSX’s U.S.-listed components based in Russia, NYSE Arca had halted trading in the shares of wireless communications company Mobile TeleSystems PJSC
since 3:52 a.m. Eastern as early as Feb. 28. The shares of search engine Yandex N.V.
and ecommerce portal Ozon Holdings Ltd.
have been halted by Nasdaq since 6:38 a.m. on Feb. 28, for “news pending.” No time for the resumption of trading was provided.
Ozon said early Friday that if the trading halt of its stock lasted to March 8, a “Delisting Event” could be triggered under terms of its $750 million, 1.875%, senior unsecured convertible bonds due 2026.
The only U.S.-listed component of the VanEck Russia ETF that hasn’t been halted is VEON Ltd.’s
stock, which bounced 52.1% to 40 cents on Friday after closing Thursday at a record low. The stock was still down 67.5% since the invasion started.
VEON, the Netherlands-based internet services provider which generates nearly half of its revenue from Russia, according to FactSet data, said early Friday that it has concluded that it is not subject to European Union sanctions as a result of sanctions imposed on Mikhail Fridman and Peter Aven on Feb. 28. Both Fridman and Aven had stepped down from the board of L1T VIP Holdings S.à r.l., which held about 48% of VEON’s common and voting shares.
VEON said Fridman had stepped down from Veon’s board on Feb. 28, and Aven is not a director of VEON.