Ever wanted to own a tiny piece of a giant German conglomerate? Now’s your chance.
What happened: CIBC will launch Canadian Depositary Receipts (CDRs) for five German companies on Friday. CDRs are certificates that let Canadian investors hold fractional shares in foreign firms that, unlike regular foreign shares, are priced in Canadian dollars.
- The CDRs will be listed on the Cboe Canada exchange — a small exchange often used to list products like ETFs — and represent big names like BMW and Siemens.
Catch-up: Since first hitting the market in 2021, CDRs have grown in popularity. They eliminate worries surrounding currency fluctuations that typically come with foreign stocks and let investors buy fractional shares, which are smaller, more affordable slices of shares.
- In the fourth quarter of 2024, nearly $244 million worth of CDRs were traded every day on average — a 523% increase in trading volumes from the first quarter of 2023.
Why it matters: Cboe Canada currently lists 65 CDRs, but all of them are for American companies. As CIBC offers the first European options, with more expected in the future, investing in companies across the pond could become more accessible for retail investors.
Big picture: Canadian investors have an increasing appetite for foreign investments. According to Statistics Canada, investment in foreign securities hit a record $35.6 billion in March of last year.—QH