June 10, 1991
TO: SEC RULES COMMITTEE NO. 32-91
CLOSED-END FUND COMMITTEE NO. 12-91
INTERNATIONAL COMMITTEE NO. 8-91
INVESTMENT ADVISERS COMMITTEE NO. 24-91
INVESTMENT ISSUES COMMITTEE NO. 3-91
RE: SEC SEEKS COMMENTS ON AMERICAN DEPOSITARY RECEIPT MARKETS
__________________________________________________________
The Securities and Exchange Commission recently issued a
concept release soliciting public comment on the functioning and
characteristics of the American depositary receipt ("ADR")
marketplace, as well as related regulatory issues. A copy of the
release is attached.
ADRs represent ownership interests in a specified number of
securities (typically, equity securities of a foreign issuer)
that have been deposited by a holder with a depositary
(typically, a U.S. bank or trust company). The depositary issues
negotiable certificates representing the ADRs in exchange for the
deposited securities. According to the concept release, ADRs
offer U.S. investors certain advantages over direct ownership of
foreign securities, such as facilitation of share transfers and
conversion of dividends paid in a foreign currency.
The release poses a lengthy series of questions on a number
of different topics, which include the following:
1. Possible changes to the existing 1933 Act registration
process for ADRs, with respect to disclosure
requirements, registration statement liability and
information provided or made available to investors;
2. Modification of the application of reporting
requirements to ADRs under the 1934 Act;
3. Issues relating to the possible consequences of
duplication of "sponsored" ADR facilities (i.e., ADR
facilities established jointly by an issuer and a
depositary) by "unsponsored" ADR facilities (i.e., ADR
facilities established by a depositary without
participation of the issuer); and
4. Possible direct SEC regulation of depositaries.
The release also requests information from commenters on the
costs and benefits associated with any changes to the existing
regulatory structure.
Comment letters responding to the concept release must be
filed by September 30, 1991. If there are positions you would
like the Institute to consider including in a comment letter,
please contact me.
Frances M. Stadler
Assistant General Counsel
Attachment