China Sanctions list...
Under the Executive Order, beginning at 9:30 a.m. Eastern Standard Time on January 11, 2021, new purchases by any United States persons in impacted investments can no longer occur. Holders with existing impacted investments are permitted to divest their investments until 11:59 p.m. Eastern Standard Time on November 11, 2021.
While the Executive Order permits divestments through November 11, 2021, given the number of sanctioned transactions, ongoing uncertainties around market participants' ability to process transactions and the potential consequences to both our clients and Merrill in the event of a breach or error, based on information available to us at this time, Merrill may cease activities in all sanctioned investments beginning on January 11, 2021. This means that Merrill may not accept any order or instruction to trade, sell, unwind, novate, settle, clear, transfer or perform other similar services in sanctioned investments after 4:00 p.m. Eastern Standard Time on January 5, 2021. Merrill may not resume such activities for the foreseeable future, and potentially indefinitely. There may be other brokers who may be able to accommodate certain activities after January 11, 2021.
While the precise scope and impact of the Executive Order are uncertain, as described above, the liquidity in relevant markets in investments that provide exposure to securities of these companies may decrease or potentially be eliminated. These market developments can adversely impact the value of your investments. To the extent there is a market for them in the future, the price at which you may divest your investments may be materially lower than the price you paid for them, and the market value of any remaining impacted investments that you continue to own may be significantly lower than they are today. We cannot predict the precise impact of the Executive Order to the market or your investments, or whether any adverse market developments that may materialize would be temporary or be sustained for a prolonged period.
If you own any sanctioned investments, we urge you to carefully consider the potential impact to your investments if you wish to continue to hold them. In order to ensure an orderly process, if you wish to divest your impacted investments held at Merrill (including if you wish to transfer them to another broker), we must receive your order or instruction do so by no later than 4:00 p.m. Eastern Standard Time on January 5, 2021 — otherwise, you must be prepared to own them for a prolonged period, potentially indefinitely and potentially at a significantly reduced value. Merrill will aim to divest impacted positions in client accounts that it manages by January 5, 2021.
Merrill and its affiliates may engage in activities that could result in conflicts of interests between us and our clients with respect to transactions in the sanctioned investments. In particular, subject to applicable law, we may trade as principal prior to or alongside your transactions, without further disclosure to you, in order to mitigate our risk, source liquidity, or facilitate transactions with you or others, any of which may impact the price or liquidity of your transactions. With respect to over-the-counter derivative transactions, we may also unwind or adjust any hedges we hold in our sole discretion. These activities may also impact the price or liquidity of your transactions.
Clients have impacted holdings if they own any of the securities listed below at Merrill as of December 18, 2020. For clients who do not own any of these securities as of that date, the Executive Order does not impact their holdings at Merrill. Impacted holdings at Merrill may be different or may change if clients purchase or transfer in sanctioned securities in their accounts after this date.
1. Semiconductor Manufacturing International Corp. (SMIC)
4. CRRC Corp.
Based on current information, below is a list of sanctioned companies. The precise scope and impact of the Executive Order are uncertain. This list of companies and their impacted sanctioned securities are subject to change if we receive additional clarity or guidance regarding the Executive Order. You may have impacted holdings if you engage in transactions or acquire in investments that provide exposure to sanctioned securities of these companies.
Companies with sanctioned securities
IMPORTANT NOTICE: Executive Order Prohibiting Transactions in Securities of Certain Chinese Military Companies Starting January 11, 2021
On November 12, 2020, the President issued an Executive Order prohibiting any transaction in publicly traded securities (debt or equity) of certain Chinese companies by United States persons. The Executive Order currently impacts 35 sanctioned companies; additional companies may be designated pursuant to the Executive Order. In addition to securities issued by these companies, the prohibition extends to any transaction that is derivative of or provides investment exposure to such securities. The information we are providing to you is based on our best understanding, interpretation and assessment of the Executive Order, about which we are seeking further guidance and clarity. For instance, we are seeking clarity with respect to instruments which reference broad-based indices where one or more securities of a sanctioned company is a constituent, including exchange-traded funds and listed options on such indices. See Annex A for impacted investments.Under the Executive Order, beginning at 9:30 a.m. Eastern Standard Time on January 11, 2021, new purchases by any United States persons in impacted investments can no longer occur. Holders with existing impacted investments are permitted to divest their investments until 11:59 p.m. Eastern Standard Time on November 11, 2021.
While the Executive Order permits divestments through November 11, 2021, given the number of sanctioned transactions, ongoing uncertainties around market participants' ability to process transactions and the potential consequences to both our clients and Merrill in the event of a breach or error, based on information available to us at this time, Merrill may cease activities in all sanctioned investments beginning on January 11, 2021. This means that Merrill may not accept any order or instruction to trade, sell, unwind, novate, settle, clear, transfer or perform other similar services in sanctioned investments after 4:00 p.m. Eastern Standard Time on January 5, 2021. Merrill may not resume such activities for the foreseeable future, and potentially indefinitely. There may be other brokers who may be able to accommodate certain activities after January 11, 2021.
While the precise scope and impact of the Executive Order are uncertain, as described above, the liquidity in relevant markets in investments that provide exposure to securities of these companies may decrease or potentially be eliminated. These market developments can adversely impact the value of your investments. To the extent there is a market for them in the future, the price at which you may divest your investments may be materially lower than the price you paid for them, and the market value of any remaining impacted investments that you continue to own may be significantly lower than they are today. We cannot predict the precise impact of the Executive Order to the market or your investments, or whether any adverse market developments that may materialize would be temporary or be sustained for a prolonged period.
If you own any sanctioned investments, we urge you to carefully consider the potential impact to your investments if you wish to continue to hold them. In order to ensure an orderly process, if you wish to divest your impacted investments held at Merrill (including if you wish to transfer them to another broker), we must receive your order or instruction do so by no later than 4:00 p.m. Eastern Standard Time on January 5, 2021 — otherwise, you must be prepared to own them for a prolonged period, potentially indefinitely and potentially at a significantly reduced value. Merrill will aim to divest impacted positions in client accounts that it manages by January 5, 2021.
Merrill and its affiliates may engage in activities that could result in conflicts of interests between us and our clients with respect to transactions in the sanctioned investments. In particular, subject to applicable law, we may trade as principal prior to or alongside your transactions, without further disclosure to you, in order to mitigate our risk, source liquidity, or facilitate transactions with you or others, any of which may impact the price or liquidity of your transactions. With respect to over-the-counter derivative transactions, we may also unwind or adjust any hedges we hold in our sole discretion. These activities may also impact the price or liquidity of your transactions.
Annex A
Impacted Securities Held at Merrill (as of December 18, 2020)Clients have impacted holdings if they own any of the securities listed below at Merrill as of December 18, 2020. For clients who do not own any of these securities as of that date, the Executive Order does not impact their holdings at Merrill. Impacted holdings at Merrill may be different or may change if clients purchase or transfer in sanctioned securities in their accounts after this date.
1. Semiconductor Manufacturing International Corp. (SMIC)
- Equity (Symbol: SMICY; ISIN: US81663N2062)
- Equity (Symbol: SIUIF; ISIN: KYG8020E1199)
- Equity (Symbol: CWYCY; ISIN: US16947L1052)
- Equity (Symbol: CWYCY; ISIN: US16947L1052
- Equity (Symbol: CCCGY; ISIN: US1689261030)
- Equity (Symbol: CCCGF; ISIN: CNE1000002F5)
4. CRRC Corp.
- Equity (Symbol: CRCCY; ISIN: US12651K1025)
- Equity (Symbol: CRRRF; ISIN: CNE100000BG0)
Based on current information, below is a list of sanctioned companies. The precise scope and impact of the Executive Order are uncertain. This list of companies and their impacted sanctioned securities are subject to change if we receive additional clarity or guidance regarding the Executive Order. You may have impacted holdings if you engage in transactions or acquire in investments that provide exposure to sanctioned securities of these companies.
Companies with sanctioned securities
- Aero Engine Corporation of China
- Aviation Industry Corporation of China (AVIC)
- China Aerospace Science and Industry Corporation (CASIC)
- China Aerospace Science and Technology Corporation (CASC)
- China Communications Construction Company (CCCC)
- China Electronics Corporation (CEC)
- China Electronics Technology Group Corporation (CETC)
- China General Nuclear Power Corp.
- China National Chemical Corporation (ChemChina)
- China National Chemical Engineering Group Co., Ltd. (CNCEC)
- China National Nuclear Corp.
- China North Industries Group Corporation (Norinco Group)
- China Nuclear Engineering & Construction Corporation (CNECC)
- China Railway Construction Corporation (CRCC)
- China Shipbuilding Industry Corporation (CSIC)
- China South Industries Group Corporation (CSGC)
- China Spacesat
- China State Shipbuilding Corporation (CSSC)
- China Telecommunications Corp.
- China Three Gorges Corporation Limited
- China United Network Communications Group Co Ltd
- CRRC Corp.
- Dawning Information Industry Co (Sugon)
- Hangzhou Hikvision Digital Technology Co., Ltd. (Hikvision)
- Sinochem Group Co Ltd.
- China National Offshore Oil Corp. (CNOOC)
- Semiconductor Manufacturing International Corp. (SMIC)
- China Academy of Launch Vehicle Technology (CALT)
- China Mobile Communications Group
- China State Construction Group Co., Ltd.
- Huawei
- Inspur Group
- Panda Electronics Group
- China Construction Technology Co. Ltd. (CCTC)
- China International Engineering Consulting Corp. (CIECC)
- 1
- 1