Many people take an interest in investment trades in the global markets, which includes trading in places like Russia and other emerging or developing countries, and The Bank of New York Mellon Corporation has announced record breaking figures for international trading as of September 2007.
International equity trades proceed a little differently than intranational equity trades. Purchases and sales of foreign equity shares are authorized through the use of depository receipts (DR). These are issued by depository banks, and DRs are certificates representing multiple shares, whole shares or partial shares in international companies. Depository receipts often have the same or nearly the same market value as the actual international stock, but these certificates of ownership of foreign shares are traded separately and may have their own independent market value (trading price).
There are two categories of depository receipts: American depository receipts and Global depository receipts. American depository receipts (ADRs) are issued by specific American banks and are traded on U. S. financial markets, and many foreign entities trade their shares through ADRs on American stock exchanges like the New York Stock Exchange (NYSE) or the NASDAQ. The New York Bank Mellon is the largest bank authorized to issue ADRs, which represent the American Depository Shares (ADSs) that are the whole or partial shares owned in a foreign company.
Global Depository Receipts (GDRs) are similar to ADRs in that they represent shares owned in foreign companies, are issued by an authorizing bank and can be traded at independent prices that may or may not be the same as or near the trading value of the actual foreign shares.GDRs are different from ADRs in that they usually represent shares in companies in emerging or developing countries. They differ from ADRs also in that GDRs are traded on the London Stock Exchange LSE), not on the American financial exchanges.
Mellon reports that records have been broken in American and Global depository receipt trades, or trading values. Last year at the September quarter mark, 38.7 billion ADRs had traded with a total trading value of $1.112 trillion. The current statistic for the first three quarters of 2007 show a total ADR trade of 53.1 billion DRs at a trading value of $1.872 trillion. 2007 brings in an increase of 37 percent for DR certificate trading volume and a surprising increase of 68 percent in actual trading value.
The global market did almost as well in percentage of increase of trading value, with a 45 percent increase in trading value over the same time period in 2006. Total actual trading value of GDRS, which trade on the LSE through a trading platform that is called the International Trading Book (ITB), was in reality far below the total trading value on American markets: NYSE, NASDAQ, and the American Stock Exchange (ASE). The total was reported in dollars by the LSE as being $318 billion, this compared to ADRs at $1.872 trillion in trading value.
Total combined trading value for ADRs, GDRs and over-the-counter and new issue trades on the international market was $2.270 trillion, which is an increase of 53 percent from the September 2006 DR trading value report.
Mellon’s Depository Receipt operation is in partnership with companies in more than 60 countries and acts as authorizing depositary for more than 1,270 programs for American depository receipts and Global depository receipts. Mellon issues its Depository Receipt report independently for public information and does not undertake updating the data.
“Depositary Receipt Trading Value Tops $2 Trillion for the First Time; First Nine Months of 2007 Show 53% Rise Over Last Year,” The New York Bank Mellon Corporation.