Subject to the above policy, the segregation approach prescribed by Euroclear Bank is reflected below by allocating those assets of yours that (a) were deposited with us through Euroclear Bank and (b) were subject to its segregation rules, appropriate verification, identification and documentation procedures, to the ER type account.
We have opened such ER account in your name to provide adequate transparency into the custody arrangements and to reflect the extent of the restrictions that apply to your assets held with Freedom Finance Europe.
In addition, we have transferred any cash proceeds received in connection with corporate actions on the allocated assets to your ER account from the time they were deposited with Euroclear Bank to date.
What assets does segregation concern?
Segregation concerns all assets of Clients - citizens of the Russian Federation and the Republic of Belarus, kept in the jurisdiction of Euroclear Bank, settlements for which are carried out through this settlement depository. Restrictions and blocking will currently be made on securities on sub-accounts of these clients in the Central Depository and the AIFC, kept in the systems of international depositories of Euroclear (shares of the KASE Global sector, Eurobonds and ETFs).
What risks does segregation pose for clients from the Russian Federation and the Republic of Belarus?
Segregation poses the following risks for clients from the Russian Federation and the Republic of Belarus:
• income payments (coupons and/or dividends) may be suspended; - payments will be made to a segregated account, but clients will not be able to use them until they are transferred to a trading account.
• there may be delays in settlements (after purchase and sale transactions are completed, the client will not be provided with funds or securities, since settlements for transactions or operations will be made).
• OTC transactions only. However, they will take a very long time to process, Euroclear will manually check the essence of the transaction.
• in some cases, restrictions on transactions with securities (blocking) may be introduced by superior European depositories (it will not be possible to sell previously purchased securities).
For your information:
Asset segregation is a management method in which a brokerage firm or other financial institution keeps clients’ assets separate from its own assets. This provides clients with an additional level of protection: the broker will not be able to use their investments and funds to solve the company's financial problems or cover liabilities to creditors.
Segregation is the allocation of assets and transactions of clients - citizens of the Russian Federation and the Republic of Belarus by opening special accounts for their safekeeping.
Depositing is the placement of assets (money, securities, or documents) for safekeeping in a specialized institution - a bank or depository. This ensures their safety until certain conditions or agreements are fulfilled. This method is often used in transactions so that the parties may trust each other: the assets will only be available if both parties fulfill the agreed conditions.