Trading volume on the Amazon CDRs was modest on the first day, with 9,668 shares exchanged as of 1 p.m. in Toronto. The price at that time was $22.62; each CDR represents 0.005 of a share of Amazon, which was trading at US$3,604.65 in New York.
Elliot Scherer, managing director and head of sales at CIBC’s Wealth Solutions group, said the idea for CDRs came in response to complaints from clients who’ve seen their U.S. stock gains reduced by a rise in the Canadian dollar.Article content “The S&P 500 was making all these all-time highs, Canadians in Canadian dollar terms weren’t seeing that big lift,” said Scherer.Last year, the S&P 500’s 16.3 per cent increase was cut to 14.4 per cent in Canadian dollars. In 2019, a strong loonie lopped more than 6 percentage points off the U.S. equity benchmark’s 28.9 per cent gain.
The Canadian depositary receipts are designed to allow investors to buy foreign shares in loonies. There’s a built-in hedge so that the investor’s returns are based on how the stock performs, regardless of moves in the exchange rate.