ADR facility to trigger US investments in Taiwan

Unrestricted Level I ADR facilities for Taiwanese companies could greatly expand overseas investment opportunities in Taiwan, says BNY Mellon.

BNY Mellon believes a large number of Taiwanese companies will explore establishing such Level I American Depositary Receipt or ADR programs over the next 18 months.

The new structure allows Taiwanese issuers with existing Global Depositary Receipt or GDR facilities to establish an ADR Level I Program without the need to submit an application to the Financial Supervisory Commission.

BNY Mellon notes that this will provide more investment opportunities for U.S. investors to diversify their portfolios and will benefit Taiwanese issuers by broadening their shareholder base in the U.S without stringent requirements associated with listing on a U.S. stock exchange.

The ability to provide an additional trading platform through the U.S. over the counter market will allow fungibility amongst exchanges, such as the Luxembourg Stock Exchange and London Stock Exchange, where most existing Taiwanese issuers traditionally list and/or trade their GDRs.

“There has always been demand from U.S. investors to invest in Taiwan ADRs, but under the existing GDR structure, investment was limited only to qualified institutional buyers or investors outside of the U.S.,” said Gregory Roath, head of Asia-Pacific for BNY Mellon’s Depositary Receipts business. “As the leading depositary, we have been working to bridge the gap, and took the initiative to leverage our global experience and discuss the structure with FSC. This new development will give U.S. investors irect access to such Taiwanese issuers through ADRs for the first time.”

“This news is a strong signal that the FSC is serious about ensuring Taiwan remains at the forefront of the world’s leading financial centres and expanding the range of sophisticated investment options available to investors. We look forward to engaging Taiwanese issuers to establish Level I programs in the coming years,” added BNY Mellon’s Roath.

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