Fungibility of Depository Receipts
Authors
Fungibility provides the option for converting depository receipts into underlying shares. This provisionor facility provides two way exist route to a foreign investor. He can sell the depository receipt in his domestic exchange or he can convert the DR into underlying shares and sell them on the foreign stock exchange.
Indian ADRs/GDRs
The Reserve Bank of India issued the operative guidelines on February 13,2002 permitting the re-issuance of the depository receipts. However, domestic and financial institutional investors had not taken any advantage till August 2002. The first ever two- way fungibility was concluded in the shares of Chennai based India Cements Ltd. Though it was a very small transaction, yet it paved the way for two-way fungibility in Indian capital markets.
RBI Guidelines
http://myicwai.com/knowledgebank/fm22.pdf
ADR arbitrage Opportunities - Fungibility has a role
http://people.hbs.edu/mdesai/IFM05/AmaryOttoni.pdf
Reviewed 3.3.2011
ADR arbitrage Opportunities - Fungibility has a role
http://people.hbs.edu/mdesai/IFM05/AmaryOttoni.pdf
Reviewed 3.3.2011
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