Depositary Receipt Trading Rises in 2001

BONY reports that the six-month depositary receipt trading volume on the NYSE, the AMEX and NASDAQ reached 17 billion shares, up 21% from the first half of 2000. The increased trading came despite a decline in the number of new DR programs during the same period.

Depositary receipts, which include ADRs, GDRs, EuroDRs and NYSs, are negotiable U.S. securities that generally represent a non-U.S. company’s publicly traded equity. The DRs allow non-US firms to readily trade in US markets (or any other market) in US dollars, rather than requiring investors to trade in the stock’s native currency. Although typically denominated in U.S. dollars, depositary receipts can also be denominated in Euros.

Bright Prospects

For 2001, 63 new public and private depositary receipt programs were established by companies from 21 countries, compared to 84 programs from 33 countries last year.

In addition, non-U.S. companies and governments from 11 countries raised $3.8 billion through 14 depositary receipt offerings, compared to $18.3 billion raised last year with 66 offerings by non-U.S. companies and governments from 26 countries.

The recent agreement reached by European Union officials to regulate cross-border takeovers is expected to facilitate additional European expansion in the North American markets, once it is approved this summer.

High Volume

The countries whose companies had the greatest depositary receipt trading volume in the first six months were:

• Sweden
• the UK
• Finland
• the Netherlands

Programs with the highest volume of depositary receipt trading activity were from the telecommunications sector, including Ericsson (Sweden), Nokia (Finland), Vodafone (United Kingdom) and Deutsche Telekom (Germany), according to the report.

ADRs and GDRs are identical from a legal, operational, technical and administrative standpoint, but “Global” is sometimes used rather than “American” for marketing reasons.