By Roy Kirby, Head of Core Products, SIX
Since Russia’s invasion of Ukraine four years ago, the use of sanctions has surged, creating a volatile and increasingly complex compliance regime. Just this week, we have seen further evidence of how fast-moving sanctions can be. The UK announced nearly 300 new sanctions on companies, individuals and entities supporting Russia’s war effort, in the most substantial package of new restrictions since 2022.
This has impacted market participants across the financial markets value chain, as new measures affect issuance, trading and post-trade activities. Data from SIX SSMS shows the total number of sanctioned securities has risen by 900% since January 2022, underscoring the scale of change. The number has increased sharply each year since the start of the conflict, meaning market participants have had little breathing space. While the precise compliance burden is difficult to quantify, its impact on firms has been significant – and remains ongoing.
Sanctions since 2022 have not followed a linear path. Different regimes, phased measures and layered designations mean firms cannot rely on a one-size-fits-all response. Each new development requires rapid interpretation and operational adjustment. ETF issuers face particular challenges.
Unlike single-stock exposures, ETFs can be affected if even a small portion of the portfolio becomes sanctioned. A 1% tainted holding can impact the entire fund – from valuation and liquidity to creation/redemption mechanics and disclosure obligations – requiring firms to monitor the entirety of a fund’s holdings.
Although wind-down periods are typically provided, recent data suggests issuers are not always acting within them. Following the October 2025 blocking sanctions on Rosneft and Lukoil, SIX data showed that, as of December 2025, 289 ETFs out of a universe of 12,500 (2.31%) remained exposed to one or both of these companies. This was despite prior investment bans and the availability of General Licence 127, which allowed funds to reduce their exposures by 21 November 2025.
These figures suggest some issuers either failed to divest in time or did not fully appreciate the reporting and compliance implications. In either case, delayed action increases the risk of regulatory scrutiny, mandatory reporting, potential penalties, as well as secondary impacts such as deteriorating liquidity, NAV impairment and reputational damage.
The past four years have shown that sanctions regimes can escalate quickly and unpredictably. While the future path remains uncertain, complexity is here to stay. ETF issuers must equip themselves with stronger monitoring and compliance tools to identify exposure early and respond decisively, before regulatory deadlines turn into regulatory problems.
