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About the author

Germán Gutiérrez Mejia

Associate Director | Financial Market Infrastructure

Germán Gutiérrez is Thomas Murray’s Associate Director, Financial Market Infrastructure (FMI). He joined the company in 2012 as a research analyst, monitoring market developments in the Americas and Eurasia, on which he is a subject matter expert. Since 2022 he has been a Regional Head, leading the team covering the Americas, Africa and the Middle East. He is responsible for the development of Securities Market Information profiles and conducts risk assessments of FMIs in different continents and jurisdictions.


The war in Ukraine looks far from reaching a resolution any time soon, given the slow pace of the Ukrainian counteroffensive and the lack of a common international viewpoint, as seen at the September G20 meeting in India. Capital markets in both Ukraine and Russia have so far kept operating despite the war, although the landscape for foreign investment is quite different in each country.


The Ukrainian market has been functioning almost normally since August 2022, though its operation has reduced almost exclusively to government bonds and trading in corporate instruments (shares and bonds) is very limited. Foreign investors who had holdings in Ukrainian instruments before the invasion are able to trade them, but it is not possible for them to repatriate sales and income, as the funds must be kept in the country or re-invested in local instruments.

There is, however, an exception that applies to income payments on government bonds issued after 1 April 2023. Market infrastructure entities and local custodian banks have been working hard on improving their operational arrangements to ensure continuous market operations and the safety of their information, while the regulator has been easing restrictions and developing plans to transform and stimulate the market with the aid of international partners.

NBU makes strategic FX shift

On the macro side, the National Bank of Ukraine (NBU) has been introducing measures and policies on foreign exchange (FX) transactions as well as on banking regulation and monitoring aimed at ensuring the stability of the financial market and the country’s economy. The Ukrainian Hryvnia (UAH) has been fixed against the US Dollar (USD) since July 2022, but a new strategy was announced in late June 2023. The strategy aims to:

  • ease FX restrictions;
  • transition to greater exchange rate flexibility; and
  • return to inflation targeting.

In addition, measures (such as the reduction and suspension of some NBU depository fees and the lifting of some restrictions on FX transactions) have been implemented in order to increase the interest and participation of foreign residents in government bonds (war bonds).

In general, the Asset Safety Risk exposure of non-resident investors is moderate (except for those based in Russia and Belarus who are subject to restrictions), taking into consideration the past and current measures introduced by the local government – but the constant threat created by the conflict means that the market ‘stability’ for foreign investment can change at any time.


By contrast, the conditions for foreign investors in Russia have consistently deteriorated over the last 18 months: the Russian Federal Government has been incrementally introducing tougher measures in retaliation for the sanctions imposed by Western countries. The assets of investors based in so called ‘unfriendly jurisdictions’ have been segregated into special securities and cash accounts (Type C, also called Type S), and restricted from being traded in the organised market or off-exchange.

Rules are in place that allow for:

  • the loss of ownership rights;
  • restrictions on participation in corporate events; and
  • the confiscation of assets by the Russian Government.

Foreign investors from ‘unfriendly’ countries who wish to sell their assets must obtain a special authorisation that comes with conditions, including selling the assets at a discount of at least 50% of the market value.

The Russian government has in place tight restrictions on the use of strong foreign currencies (USD, Euro, Japanese Yen and British Sterling) by local and non-residents that have been extended until March 2024, and although announcements have been made that the restrictions imposed by the international community have not had the intended impact, inflationary pressure is increasing – and in the last few months the Russian Ruble (RUB) has depreciated to levels observed at the beginning of the war. The country has been manoeuvring to avoid default and is trying to meet its obligations, although the Russian Government is considering measures related to the repayment of its Eurobonds.

Custodian banks scale back operations

The enforceable conversion of Depositary Receipts and the transfer ‘on-demand’ of Russian securities from the accounts of foreign custody services providers into National Settlement Depository (NSD) accounts have created chaotic conditions. These conditions have made precisely defining the location and ownership of the securities exceedingly difficult, worsening the situation.

In addition, the measures imposed by Russia and the international community have disrupted the settlement of Russian instruments in international markets, and every time it is increasingly difficult to complete the processing of trades due to the operational decisions announced by the international central securities depositories.

The Russian Government and the regulator (Central Bank of Russia – CBR) have required local custodian banks and the NSD to introduce restrictions that limit the access of foreign investors to their assets – thereby diminishing the transparency of the governance structure and policies maintained by these entities. As a result of these measures, some global custodians based in the US have deemed NSD ineligible under SEC Rule 17(f)-7 (this rule sets up the minimum standards for US funds to maintain assets in foreign depositories), making the Russian depository and the market no longer qualified for US investment. This is a view shared by Thomas Murray.

Finally, given the pressure from inside and outside Russia, some custodian banks have decided to scale back their operations, while in 2020 Société Générale decided to leave the market and sold back its share in Rosbank to its former owner, Interros Capital – a deal on which SocGen took a €3.1bn hit. The pressure on international custodians to leave Russia is piling up and although some of them would be willing to do so, the current conditions created by the existing restrictions might make any potential transaction difficult to complete.

Thomas Murray has been closely monitoring the developments in both markets, and assessing the impacts of the different measures implemented in both countries:

Thomas Murray Risk Grades


For Ukraine, following the downgrade in the Overall Risk Assessment from A- to BBB and further to B in our Market Asset Safety Risk Assessment (MASRA) back in March 2022, the grade has remained steady with outlook ‘On Watch.’ This takes into consideration the measures announced by the Ukrainian Government and market regulators, as well as the threat the market is still subject to.

The overall grade for our NDU risk assessment currently stands at BB, with outlook ‘On Watch.’ This reflects the reopening of the market in August 2022, and the efforts of the market infrastructure to ensure both the continuity of its operations and the safety of its financial data. Although the infrastructure has taken further actions, in Thomas Murray’s opinion these do not have the impact required to trigger a further change in the grade and outlook.

As a result of the resumption of trading in government bonds, and the measures implemented by NBU to strengthen its operations, we reviewed the outlooks of the different risk components of NBU depository risk assessment in October 2022. They stand at BBB with outlook ‘On Watch’ (from BB and ‘Negative’ outlook).

Thomas Murray has maintained the ratings for local sub-custodians at BB, although the Asset Safety and Operational risk outlooks were revised to ‘On Watch’ in September 2022.

Our Capital Market Infrastructure Risk Assessment (CMIRA) for Ukraine remains unchanged, at B with ‘Negative’ outlook.


Russia’s MASRA rating has been downgraded to CCC with ‘On Watch’ outlook since May 2022. This reflects the sanctions imposed by the Russian Government that might result in the loss of assets or the rights associated to them, and the lack of a stable framework that can ensure the safety of all foreign investors’ interests.

As it is impossible to trade on a fair basis either on- or off-exchange, the analysis of Asset Commitment periods is no longer relevant for the market in terms of both Russia’s CMIRA and NSD risk assessments. Furthermore, all risk components for both assessments have been set at CCC given the limitations imposed by Russia and the sanctions imposed by the international community. The only exception is Operational risk, which has a BB grade to reflect the soundness of the market’s operational arrangements from a technological point of view.

Both internal and external sanctions have hit custodian banks hard. The most affected custodian bank is Sberbank, whose overall rating has been set at CCC since May 2022. Only Raiffeisen stands at BBB. Many of the banks have been kept at B, a grade principally supported by the banks’ operational capabilities, while the elements associated at Asset Safety, Asset Servicing and Financial risks are at the lowest scale of the assessment.

About the Risk Committee

Thomas Murray’s financial market infrastructure (FMI) analysts and bank network managers travel the world, meeting with leaders in capital markets and conducting on-site operational reviews for our clients. They report back to the Risk Committee, which meets regularly to discuss the findings and assign grades accordingly. The Committee takes into account everything from cyber risk to political and economic stability, to environmental, social and governance (ESG) issues.

The resulting reports and grades are supplied to our clients, who use the Committee’s analysis and expertise to guide them through their decision-making processes and to protect themselves and their clients from risk.

Each month, we provide a high-level summary of the Risk Committee’s discussions of the markets, banks and funds it reviewed over the previous month. You can subscribe to Risk Committee Updates on LinkedIn.


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