S&P Dow Jones Indices on Thursday reached out to all managers licensing its indexes to discuss the implications of sanctions on some Russian securities, imposed earlier in the month.
Index funds might have to divest Russian securities under new sanctions imposed by the Department of Treasury’s Office of Foreign Assets Control. The sanctions could affect 88 S&P Dow Jones indexes. The European community is also taking similar action.
“Since we’ve gotten questions and comments from clients — clients are also trying to figure out what they’re going to do and what they want us to do — we thought this (engagement of discussion) was the appropriate step,” said David M. Blitzer, managing director and chairman of the index committee S&P Dow Jones Indices.
In its outreach to index managers, S&P Dow Jones raised questions about the sanctions, including:
- “Where you have funds tracking (the 88 indexes S&P identified as containing Russian stocks) would you be disadvantaged if all sanctioned securities are removed?”
- “If S&P DJI were to remove sanctioned securities from its indices, how much notice should be given before sanctions securities are removed?”
- “If the U.S. and various European countries issue different sanction lists, should a security appearing (on) one list be treated as if appeared on all lists?”
- “(A)re there countries where you do not have clients or investors and where specific sanctions would not apply?”
S&P DJI asks index fund managers to respond by Aug. 15.
“As a result of all this analysis, we may drop some stocks from some indexes,” Mr. Blitzer said. “It will depend on who is using the index, how it is being used, and what their situation is. Once we get the information, we will be in a better position to analyze it.”
