On 31 May 2011, the Order of the Federal Service for Financial Markets of the Russian Federation that approves a new procedure (i) for recording the pledge of registered issue-grade securities in the securities register; and (ii) for the transfer of title upon enforcement of these securities (the "Procedure") came into force.

The main innovations of the Procedure are the possibility to indicate in a pledge instruction (i) the date on which the pledgee has the right to seek out-of-court enforcement of the pledged securities; (ii) the term during which the pledged property must be disposed; and (iii) the documents that the pledgee must provide to the registrar when seeking the termination of a pledge and the out-of-court enforcement of the pledged securities.

In terms of the latter point, the Procedure applies to the following documents:

  • a sale and purchase agreement for the pledged securities concluded during an auction for their sale upon enforcement;
  • details from the register of the auction organiser's auctions in order to confirm the sale by auction of the securities;
  • a sale and purchase agreement concluded by a commission agent and the commission agreement between the pledgee and the commission agent;
  • (following the failure of a first auction upon enforcement) the minutes of a second auction held within the past month (if the pledgee is entitled to transfer the pledged securities to itself following failure of the second auction); or
  • the copy of a notice from the pledgee to the pledgor notifying of the disposal of the pledged property and/or the acquisition of the pledged property by the pledgee, with the confirmation that the notification has been sent to the pledgor (if the pledgee is entitled to transfer the pledged securities to itself).

Consequently, the Procedure improves the registration process by regulating in detail the process of removing the encumbrances over the securities in the pledge register.

[Federal Service for Financial Markets of the Russian Federation Order No. 11-10/pz-n "On Approving the Procedure of Recording the Pledge of Registered Issue-grade Securities in the Register and Registering Changes on the Transfer of the Rights over Pledged Registered Issue-grade Securities", dated 5 April 2011]