Legal requirements compromise trading in cannabis securities
As a result of a new guidance issued by the Luxembourg supervisory authority, settlement of transactions in equities of companies whose main business activity is in the cannabis sector will no longer be possible for the time being from 28 September onwards. For this reason, trading in these securities on the Frankfurt Stock Exchange will cease on 24 September. German equities are not affected.
Clearstream Banking AG in Frankfurt uses Clearstream Banking S.A. headquartered in Luxembourg as the depository for foreign securities. The Luxembourg supervisory authority has now issued guidance to Clearstream Banking S.A. according to which the company may no longer process securities directly or indirectly connected to the cannabis sector. The reason for this decision is that cannabis is currently an illegal sector under Luxembourg law.
As a result of this regulatory guidance, Clearstream Banking AG in Frankfurt will not be able to provide any settlement services for such securities either. Consequently, Clearstream Banking AG will have to withdraw its settlement declarations and Frankfurt Stock Exchange will cease trading in the affected securities. Trading will cease on 28 September, affecting a current total of around 150 equities, which Clearstream has listed here in an overview that will be updated on a regular basis. The list does not include any German equities.
Important answers for investors at a glanceWhat does the rule mean for my securities? Will I have to sell my securities now?
Frankfurt Stock Exchange trading in the affected securities will cease at the end of 24 September 2018. Thereafter, it will no longer be possible to buy or sell the affected securities on the Frankfurt Stock Exchange.
What happens if I don't sell my securities and keep them in my securities account?
Trading in the affected securities will cease at the end of 24 September 2018. Thereafter, it will no longer be possible to buy or sell the affected securities on the Frankfurt Stock Exchange. Investors may buy or sell the securities on other stock exchanges after 24 September. Particularly large, international online banks frequently offer a choice of several foreign trading venues. In the current legal situation however, settlement via Clearstream Banking S.A. will not be not possible.
Will it be possible to trade the respective securities to which this transition period applies without any issue until 24 September?
Trading in the affected securities on the Frankfurt Stock Exchange will cease at the end of 24 September 2018. Until such time, the securities may be traded on Börse Frankfurt, as long as they are still supported by a specialist.
Can buy orders still be placed for the affected securities until 24 September?
It is still possible to buy the respective securities. It might not be possible to fill the buy order, if the responsible specialist is unable to meet the demand for the respective security. Furthermore, individual securities may be suspended from trading upon request.
Which manufacturers or narcotics are affected?
Cannabis, marihuana and similar substances (e.g. cannabinoids), which are considered illegal under Luxembourg law are affected. The guidance applies to equities of companies whose main business activity is in the cannabis sector. This also affects companies who undertake a large share of their investing in the cannabis sector - through subsidiaries, for example. Major pharmaceutical companies whose product ranges include some products containing cannabis/cannabinoids are not affected by this rule (e.g. Bayer, Novartis, etc.). German securities are not affected.
Which securities are affected by the cessation of trading on 24 September?
- Please see this PDF for the names and ISINs of affected securities (version 22 June 2018). German securities are not affected.
Which specific key figures and thresholds do you use to determine that a company's main business activity is in cannabis?
The affected securities have been individually determined. A risk-based analysis, which includes but is not limited to legal aspects, serves as the basis for determining which securities are admitted or continue to be/are eligible for Clearstream Banking S.A. services.
Clearstream has offered settlement of the respective securities for years, so why this negative assessment result now?
In its capacity as central securities depository, Clearstream Banking S.A. received guidance on handling cannabis-related securities from its local Luxembourg supervisory authority prior to making its announcement. The company naturally follows such guidance.
For what reasons does Deutsche Börse assume the legal position of its Luxembourg subsidiary?
Clearstream Banking S.A. (Luxembourg) holds Clearstream Banking AG's (Frankfurt) foreign securities in custody. Clearstream Banking S.A.'s decision means that Clearstream Banking AG is technically no longer in a position to offer services for the affected securities. This does not affect German securities for now.
29 June 2018 © Deutsche Börse AG