Cboe to list covered ADRs developed by Precidian By Reuters

By Laura Matthews

NEW YORK (Reuters) – Precidian Investments on Monday launched covered ADRs that U.S. investors can use to buy publicly traded stocks while limiting the impact of currency fluctuations.

Precidian, a developer of exchange-traded funds, said it will list American covered depositary receipts on the US Cboe stock exchange.

Investors who buy shares of foreign companies, including ADRs, are exposed to fluctuating exchange rates between the dollar and the foreign currency. But by pairing ADRs with a currency overlay into a single security, investors can mitigate currency exposure, Cboe said.

The Canadian Imperial Bank of Commerce will be the counterparty providing the foreign exchange coverage.

“This is really the next generation of ADRs for US investors,” Rob Marrocco, global head of ETP listings at Cboe, told Reuters. The product will be called ADRhedged.

The US stock exchange Cboe will initially list AstraZeneca (NASDAQ: ) ADRhedged, HSBC Holdings (NYSE: ) ADRhedged and Shell (LON: ) ADRhedged and anticipates adding 14 more soon after.

Stuart Thomas, founding director at Precidian, told Reuters the $1 trillion-plus ADR market has needed a hedged alternative for decades.

ADRhedged comes as the greenback’s appreciation against most global currencies over the past decade has caused ADR investments to underperform in dollar terms, Cboe said.

“People have been buying them for years, but the average investor hasn’t had access to currency hedging for international investments,” Thomas said. “Now you have another set of tools at your disposal.”