ADR trading in Singapore picks up over US platforms

, , Depositary receipts, Secondary listings, Singapore

As previously announced in September 2010, the Singapore Exchange (SGX) introduced on 22 October 2010 trading of American Depositary Receipts (ADRs) issued by Asian companies in the Asian time zone.

The SGX has established a platform for the trading of international securities called GlobalQuote, developed in partnership with NASDAQ OMX. Trading of ADRs on GlobalQuote is in US dollars and in board lot sizes of 10 ADRs. At the moment, trading is only allowed for Level 2 and Level 3 ADRs (i.e. for ADRs of companies that are listed, rather than just traded, in the US).

A total of 19 ADRs are currently traded in Singapore, including those issued by Baidu, China Mobile, China Telecom, China Unicom, NetEase, PetroChina and Sinopec. These include nine single-listed ADRs (i.e. without listed underlying shares listed elsewhere) and ten dual-listed ADRs.

Trading of the ADRs in Singapore has increased steadily since launch. Interest in ADRs of companies with primary share listings in Hong Kong accounted for a significant portion of the activity as the cost advantage, convenience and longer trading hours of SGX-quoted ADRs drew investors.

According to the SGX, GlobalQuote now has a market share of up to 7% compared to trading for those companies in their primary listing market. For instance, trading in Sinopec’s ADRs totaled US$4.4 million per week, representing on average half the volume traded in US markets and 4% of that for its ordinary shares traded in Hong Kong; while trading in China Eastern Airlines’ ADRs reached US$4.2 million per week, equivalent on average to 40% of the turnover traded in US markets and 2% of that for its ordinary shares in Hong Kong.