The UK plans to revoke the Moscow Stock Exchange's status as a recognised exchange it announced on Tuesday, cementing Russia’s position as a pariah from the global financial system even further.
The move, announced by the HM Revenue & Customs (HMRC), means investors will not be able to access certain UK tax benefits in the future when trading securities on the MOEX (MOEX.ME) bourse. However, existing investments will be protected.
Recognised stock exchange status is a classification given by the tax authority for tax purposes. Securities traded on a recognised stock exchange are eligible for certain tax treatments and reliefs.
Revoking it will limit access to tax reliefs such as an exemption from withholding tax on some bonds.
"As we continue to isolate Russia in response to their illegal war on Ukraine, revoking Moscow Stock Exchange’s recognised status sends a clear message – there is no case for new investments in Russia," said Lucy Frazer, financial secretary to the Treasury.
The HMRC said the move was in response to restrictions the Bank of Russia has placed on foreign investors. Brokers had been banned from selling assets for non-residents of Russia on the exchange, meaning it is no longer operating in line with the standards expected of a recognised exchange, it said.
HMRC said it has started a two-week consultation on the decision on Tuesday.
Read more: How economic sanctions work
It comes after Moscow banned foreign investors from pulling their investments in Russian stocks.
Russian president Vladimir Putin formally barred Russian companies from listing on foreign stock exchanges, marking a fresh blow to the country’s tycoons.
The Russian leader has signed off on legal amendments that require firms to delist their overseas shares, marking an end to a process that has gathered pace since the annexation of Crimea in 2014.
Last month, trading resumed on the exchange after officials halted it to stave off financial collapse. The closure from 25 February, a day after its invasion of Ukraine, to 24 March, marked the longest market closure in the country's history.
UK prime minister Boris Johnson, US president Joe Biden and other world leaders are expected to hold a call later on Tuesday to discuss additional embargoes against Russia.
So far a host of western countries including the UK, US and Europe have unleashed an array of sanctions, including energy and corporate, designed to hit Russia's economy to convince it to halt the war. But, despite the prospect of a looming recession and inflation soaring near 20% it has mostly defied forecasts thanks to a plentiful petrodollars and stiff capital controls.
Watch: Why are gas prices rising?