The ongoing Russia-Ukraine conflict is fueling intense volatility in the markets. Today, some of that volatility in key names is stalling out as regulators enact Russian stock halts.
So what is going on?
Well, the Financial Industry Regulatory Authority (FINRA) has directed stock halts in several key Russian stocks, including Rosneft(OTCMKTS:RNFTF), Sberbank(OTCMKTS:SBRCY), Gazprom(OTCMKTS:GZPFY), Norilsk Nickel(OTCMKTS:NILSY) and Lukoil(OTCMKTS:LUKOY). Each of these stocks trades over-the-counter. Several represent the American Depositary Receipts (ADRs) for those companies.
Trading halts can happen for a number of reasons. One common trigger for a stock halt is a dramatic move higher or lower in a short period of time. These halts are aimed at avoiding inefficiencies in the market that could lead some stocks to surge or plunge further than they otherwise might for technical reasons.
However, these Russian stock halts by FINRA appear to be tied to concerns around economic sanctions put forward by President Joe Biden. Earlier this week, the Nasdaq and New York Stock Exchange halted trading in Russian-based companies as well.
Let’s dive a bit deeper into what these halts mean for investors.
What to Know About Russian Stock Halts
Importantly, it is worth noting that such widespread trading halts are not common. The moves by FINRA, Nasdaq and the NYSE come as global exchanges make similar decisions. The London Stock Exchange announced it would suspend trading in Russian-based companies. Earlier this week, Robinhood(NASDAQ:HOOD)enacted similar halts.
Investors should note that index providers FTSE Russell and MSCI also announced moves to remove Russian equities from their indices. Thus, this coming week could continue to be a very volatile one for Russian stocks, as investors look to unload positions.