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Adr & Gdr

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ADRs and GDRs :

American Depositary Receipt (ADR):

* U.S. financial institutions can issue depositary receipts (ADRs) of a foreign company's stock in U.S. dollar and in the U.S. markets. ADR is a receipt representing a number of foreign shares that remain on deposit with the U.S. depository's custodian in the foreign company's home market.

* ADRs are issued to offer investment routes that avoid the expensive and cumbersome laws that apply some times to noncitizens buying shares on local exchanges.

o Optional detail: ADRs can be Level I ADRs (unsponsored ADRs) which are traded in OTC market, or Level II and Level III ADRs which are traded in stock exchanges such as NYSE and NASDAQ.

* Voting rights: The purchaser of certain types of ADRs has a theoretical right to exchange the receipt without voting rights for the shares with voting rights. But in practice, no one appears to be interested in exercising this right.

* Singapore Depository Receipts (SDRs) are traded in the Singapore Stock Exchange.

Global Depository Receipt (GDR):

* Similar to the ADR described above, except the GDR is usually listed on stock exchanges outside the US, such as Luxembourg or London. Dividends are usually paid in U.S. dollars.

* GDR allows a foreign firm to simultaneously cross-list on several national exchanges.

* GDRs are similar to ADRs as far as voting rights go.

Structured Investment Vehicle - SIV (Also known as "conduits").

* A pool of investment assets that attempts to profit from credit spreads between short-term debt and long-term structured finance products such as asset-backed securities (ABS).

* Funding for SIVs comes from the issuance of commercial paper that is continuously renewed or rolled over; the proceeds are then invested in longer maturity assets that have less liquidity but pay higher yields. The SIV earns profits on the spread between incoming cash flows (principal and interest payments on ABS) and the high-rated commercial paper that it issues.

* SIVs often employ great amounts of leverage to generate returns.

* SIVs are less regulated than other investment pools, and are typically held off the balance sheet by large financial institutions such as commercial banks and investment houses.

* They gained much attention during the housing and sub-prime fallout of 2007; tens of billions in the value of off-balance sheet SIVs was written down as investors fled from sub-prime mortgage related assets.

Many investors were caught off guard by the losses because little is publicly known about the specifics of SIVs,



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