Cboe Global Markets, Inc has announced the listing of new ADRhedged™ securities (ADRH) on Cboe U.S. beginning today. The new ADRHs are sponsored by Precidian Investments, an industry leader in the creation of innovative financial products.
To provide the currency hedge for each ADRH, Precidian has engaged CIBC, a leading North American financial institution who pioneered CDRs in Canada in 2021. There are now 65 CDRs listed on Cboe Canada with more than $50 billion CAD in trading volume since launch and $6 billion CAD in assets under management.
American Depositary Receipts (ADRs) trade in U.S. dollars, they come with an additional risk – fluctuations in foreign currency. When the U.S. dollar experiences dramatic appreciation against global currencies, as has been the case in recent years, ADR investors may underperform in U.S. dollar terms.
Precidian’s new ADRHs are designed to provide U.S. investors with simple, cost-effective exposure to individual international companies, with the added benefit of an embedded currency hedge.
Each ADRH consists of an ADR on an underlying international company priced at approximately $50 USD per share, combined with a currency hedge designed to help mitigate the currency risk resulting from fluctuating foreign exchange rates between the international company’s local currency and the U.S. dollar.
By coupling both the share ownership and currency hedge in a single security, ADRHs are designed to give all investors access to a strategy that was, by and large, previously only available to sophisticated institutional investors. ADRHs can be bought or sold like any other exchange traded security.
“Cboe is the exchange for innovative products, and we are proud to work with Precidian as the exclusive listings exchange for these first-of-their-kind products in the U.S.,” said Rob Marrocco, Vice President, Global Head of ETF Listings, Cboe Global Markets. “Leveraging our vast global network of listings exchanges, issuer partners and diverse products, we are able to import product innovation and market structure best practices from one region to another to benefit investors. The currency-hedged CDRs have proven incredibly popular with Canadian investors, and we believe U.S. investors will find similar appeal in the global access and diversification that new ADRHs can provide.”
“Precidian is proud to work with Cboe, CIBC, and BNY Mellon to bring ADRHs to market. This represents another U.S. market first by Precidian and demonstrates our expertise in creating unique, innovative products that address the needs of investors,” said Dan McCabe, CEO of Precidian Investments.
The launch of ADRhedged products will occur in phases, with the first three companies – AstraZeneca, HSBC, and Shell – listed on October 7. Cboe anticipates listing 14 additional ADRHs in short order.
