Precidian to List First ADRhedged Securities in the U.S. on Cboe, Providing Exposure to Individual International Companies with an Embedded Currency Hedge

Rhea-AI Summary

Cboe Global Markets announced the listing of new ADRhedged™ securities (ADRH) on Cboe U.S. starting October 7, 2024. These innovative products, sponsored by Precidian Investments, aim to provide U.S. investors with exposure to individual international companies while including an embedded currency hedge. ADRHs combine an ADR priced at approximately $50 USD per share with a currency hedge to mitigate risks from foreign exchange rate fluctuations.

The launch will occur in phases, with AstraZeneca, HSBC, and Shell being the first three companies listed. Cboe anticipates listing 14 additional ADRHs soon. This new offering builds on the success of currency-hedged Canadian Depositary Receipts (CDRs) listed on Cboe Canada, which have seen over $50 billion CAD in trading volume and $6 billion CAD in assets under management since their 2021 launch.

Positive

• Introduction of innovative ADRhedged™ securities (ADRH) providing exposure to international companies with embedded currency hedge
• Expansion of Cboe's product offerings, potentially attracting more investors and increasing trading volume
• Leveraging success of CDRs in Canada, which have seen over $50 billion CAD in trading volume
• Partnership with established financial institutions: Precidian Investments, CIBC, and BNY

Negative

• None.

Insights

Financial Analyst

The launch of ADRhedged securities (ADRHs) on Cboe represents a significant innovation in the U.S. financial markets. These products offer a unique value proposition by combining exposure to international companies with built-in currency hedging, addressing a key risk factor for U.S. investors in foreign stocks.

The success of similar products in Canada, with $50 billion CAD in trading volume and $6 billion CAD in assets under management, suggests strong potential demand in the U.S. market. This could drive increased trading volumes and fee revenue for Cboe, potentially boosting its financial performance.

The phased launch approach, starting with high-profile companies like AstraZeneca, HSBC and Shell, allows Cboe to gauge market reception and adjust accordingly. With 17 ADRHs planned in total, this new product line could significantly expand Cboe's offerings and attract new investors to its platform.

For Cboe shareholders, this initiative aligns with the company's strategy of diversifying its product range and expanding its global footprint. The partnership with industry leaders like Precidian, CIBC and BNY Mellon also strengthens Cboe's market position and could lead to further collaborative opportunities.

Market Research Analyst

The introduction of ADRHs addresses a clear market need, particularly in the current economic environment where currency fluctuations have significantly impacted returns for U.S. investors in foreign stocks. This product democratizes access to currency-hedged international investments, previously mainly available to institutional investors.

The timing of this launch is strategic, coinciding with a period of U.S. dollar strength against many global currencies. This market condition enhances the appeal of currency-hedged products, potentially driving strong initial adoption.

The selection of well-known international companies for the initial ADRHs is likely to resonate with retail investors, offering familiar names with reduced currency risk. This could lead to increased retail participation in international investing, potentially expanding Cboe's customer base.

As the exclusive listing venue for ADRHs, Cboe is positioning itself as an innovation leader in the exchange space. This exclusivity could drive increased order flow and market share gains in the competitive exchange landscape, potentially leading to long-term growth in trading volumes and market data revenues.

• ADRhedged™ securities (ADRHs) are designed to provide U.S. investors simple, cost-effective exposure to the share price of individual international companies with the added benefit of an embedded currency hedge
• New offering in the U.S. builds on success of currency-hedged Canadian Depositary Receipts (CDRs) listed on Cboe Canada
• ADRHs are sponsored by Precidian Investments ("Precidian"), currency hedged by Canadian Imperial Bank of Commerce ("CIBC"), custodied with Bank of New York Mellon ("BNY Mellon") and listed exclusively on Cboe BZX Exchange, Inc. ("Cboe U.S.")

CHICAGO, Oct. 7, 2024 /PRNewswire/ -- Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading securities and derivatives exchange network, 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) are a 100-year-old financial product that provide a way for U.S. investors to access shares of global companies. Although 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. 

"CIBC is committed to working with its clients to execute market-based solutions that address investor needs," added Christian Exshaw, Managing Director and Head, Global Markets and Direct Financial Services at CIBC Capital Markets. "We are excited to see the U.S. market response to this innovative product." 

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. The ADRHs to be listed include:    

Name	Ticker Symbol
Anheuser-Busch InBev SA/NV ADRhedged™	BUDH
AstraZeneca PLC ADRhedged™	AZNH
Banco Santander S.A. ADRhedged™	SANH
BP p.l.c. ADRhedged™	BPH
British American Tobacco p.l.c. ADRhedged™	BTIH
Diageo plc ADRhedged™	DEOH
GSK plc ADRhedged™	GSKH
HSBC Holdings plc ADRhedged™	HSBH
Mitsubishi UFJ Financial Group, Inc. ADRhedged™	MUFH
Novartis AG ADRhedged™	NVSH
Novo Nordisk A/S (B Shares) ADRhedged™	NVOH
Shell plc ADRhedged™	SHEH
Sanofi ADRhedged™	SNYH
SAP SE ADRhedged™	SAPH
TotalEnergies SE ADRhedged™	TTEH
Toyota Motor Corporation ADRhedged™	TMH
Vodafone Group Plc ADRhedged™	VODH

Cboe is currently the second largest ETF listing venue in the U.S. with more than 825 ETF listings. Cboe Europe is the first pan-European listing venue for ETFs, and currently offers approximately 125 listings. Cboe Canada is home to more than 320 listings including public companies, ETFs, and CDRs. There are more than 25 ETFs and 1,200 other investment products quoted on Cboe Australia.  

About Cboe Global Markets, Inc.

Cboe Global Markets (Cboe: CBOE), the world's leading securities and derivatives exchange network, delivers cutting-edge trading, clearing and investment solutions to people around the world. Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives and FX, across North America, Europe and Asia Pacific. Above all, we are committed to building a trusted, inclusive global marketplace that enables people to pursue a sustainable financial future.  

To learn more about the Exchange for the World Stage, visit www.cboe.com.     

Media Contacts			Cboe Analyst Contact
Angela Tu	Tim Cave		Kenneth Hill, CFA
+1-646-856-8734	+44 (0) 7593-506-719		+1-312-786-7559
atu@cboe.com	tcave@cboe.com		khill@cboe.com

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SOURCE Cboe Global Markets, Inc.

FAQ

What are ADRhedged™ securities (ADRH) and when will they be listed on Cboe (CBOE)?

ADRhedged™ securities (ADRH) are new financial products that provide U.S. investors exposure to individual international companies with an embedded currency hedge. They will be listed on Cboe U.S. starting October 7, 2024.

Which companies will be the first to have ADRHs listed on Cboe (CBOE)?

The first three companies to have ADRHs listed on Cboe U.S. are AstraZeneca, HSBC, and Shell, with 14 additional ADRHs expected to be listed shortly after.

How do ADRHs on Cboe (CBOE) differ from traditional ADRs?

ADRHs on Cboe combine an ADR priced at approximately $50 USD per share with a currency hedge, designed to mitigate the currency risk from fluctuating foreign exchange rates between the international company's local currency and the U.S. dollar.

Who are the key partners involved in the ADRH listings on Cboe (CBOE)?

The key partners for ADRH listings on Cboe are Precidian Investments (sponsor), Canadian Imperial Bank of Commerce (CIBC) for currency hedging, and Bank of New York Mellon (BNY) as custodian.