The National Bank of Serbia published a clarification on residents’ trading in financial instruments abroad, stressing that there is no barrier to investing in foreign securities that are permitted by law but that cross-border payments for such activity must be supported by documentation enabling the bank to verify compliance with foreign exchange rules. It also noted that the relevant rules on investing in securities abroad and on payment transactions with foreign countries have not changed for many years, including since the last amendments to the Law on Foreign Exchange Operations in 2018. Residents making payments abroad, including for trading in foreign financial instruments, must submit to the bank a document showing that the payment is permissible and that the intended instruments are legally allowed, given that investment abroad is not fully liberalised. Current restrictions include limits on debt securities issued by non-EU countries, with residents permitted to trade long-term debt securities issued by the European Union and by OECD member countries with a long-term credit rating of at least A (Standard & Poor’s) or A2 (Moody’s). Short-term debt securities issued by third countries may be traded only by banks. Transactions in financial derivatives traded outside a regulated market and/or multilateral trading platform abroad are permitted only for hedging specified risks, and residents are not allowed to trade currencies abroad. The central bank highlighted the need for documentation particularly where residents trade via foreign brokers such as Interactive Brokers, whose platforms may enable trading in instruments that are not allowed under Serbian rules. It also pointed to rules under which residents may keep foreign currency in an account with a bank abroad only in exceptional cases, implying residents cannot generally transfer funds to accounts with foreign brokers and hold them there for later investment decisions or for onward payments abroad. Examples of acceptable supporting documents include a foreign broker agreement or other documents indicating which securities will be traded and in what amount, including by reference to indicative prices or resident-set investment limits, and the National Bank of Serbia noted observed cases where transfers were made under framework agreements lacking sufficient detail and legality could not be ensured through subsequent reporting after funds were returned.
National Bank of Serbia 2025-01-09
National Bank of Serbia reiterates limits on residents’ foreign securities trading and banks’ requirement for upfront proof of lawful transactions
The National Bank of Serbia clarified that residents can invest in foreign securities permitted by law, but cross-border payments must be documented to verify compliance with foreign exchange rules. Restrictions include limits on debt securities from non-EU countries, with trading allowed for long-term debt securities from the EU and OECD countries with high credit ratings. The central bank emphasized the need for documentation, especially when trading via foreign brokers, and noted that residents generally cannot hold foreign currency in accounts abroad except in exceptional cases.