Adds context, Nabiullina quote in paragraphs 2-8

By Elena Fabrichnaya

ST.PETERSBURG, Russia, July 2 (Reuters) - Commercial swaps of assets frozen in Russia and Western countries, which have faced scrutiny after fraud allegations against several brokers, do not pose a broader risk to Russia's financial markets, its central bank chief said on Thursday.

Following the start of Russia's military campaign in Ukraine in 2022, Western sanctions and Russian countermeasures froze billions of dollars of securities owned by private investors in Russia and the West.

In 2024, broker Investment Chamber organised a scheme under which foreign investors used funds frozen in Russia to buy shares in companies such as Alphabet, Tesla and Microsoft that were held by Russian investors abroad.

The initial scheme was approved by authorities and presented as a way for Russian and foreign investors to unlock assets trapped by Western sanctions and Russian restrictions.

Last month, Russia's FSB security service accused several brokers involved in follow-up swaps of fraud linked to depositary receipts issued by Russian companies and moved to arrest their managers.

The FSB alleged the transactions harmed Russian companies that issued the depositary receipts and breached Russian law. Some investors have also argued that sales of released securities distorted the market.

Governor Elvira Nabiullina said the central bank was monitoring whether brokers involved in the swaps had obtained official permission to bring released assets back into Russia, a requirement that the FSB alleges was violated.

"In my view, this is not a systemic issue. We do not see any impact on the stock market. Nor is it linked to any significant inflow of securities that entered the market by circumventing sanctions," she said.

Nabiullina added that the swaps had not significantly reduced the overall volume of frozen Western assets held in Russia's special Type C accounts.

Russian and foreign investors have complained about the opacity and legal uncertainty surrounding the swaps. The recent arrests of prominent brokers and the FSB's allegations have added to those concerns.