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BM&FBOVESPA announced yesterday (December 15, 2010) the start of a new selection process for depository institutions authorized to issue Unsponsored Level 1 BDRs (Brazilian Depositary Receipts). The winner will issue 10 BDR programs that represent stocks issued by publicly-traded companies with headquarters overseas. The depository institutions that wish to take part in the selection process should forward their proposals by January 31, 2011. The rules of the selection process are contained in the call for bids Bid Notice.
On October 5, BM&FBOVESPA began trading the country’s first Unsponsored Level 1 BDRs, issued by Deutsche Bank S.A. and by the following companies: Apple Inc., Google Inc., Bank of America Corporation, Arcelor Mittal, Goldman Sachs Group Inc., Avon Products Inc., Wal Mart Stores Inc., Exxon Mobil Corporation, McDonald’s Corp. and Pfizer Inc.. On November 29, trading began of the lot issued by Citibank for BDRs representing Alcoa Inc.; Cisco Systems, Inc.; Citigroup Inc.; Freeport-McMoran Copper & Gold Inc.; General Electric Company; Intel Corporation; Merck & Co. Inc.; Microsoft Corporation; Procter & Gamble Company and Wells Fargo & Company.
The Unsponsored Level 1 BDR is a certificate representing stock issued by a foreign-headquartered publicly traded company or the like. It is thus considered a foreign investment from Brazil, in keeping with the definition of CVM Instruction 332/00. The issue and registry of Unsponsored Level 1 BDRs is the responsibility of a depositary institution in Brazil in which none of the companies represented has a stake.
BDRs can be traded by financial institutions, investments funds, portfolio managers and stock consultant authorized by the Brazilian Securities and Exchange Commission (CVM). The last two in the list are only permitted to invest own capital. Individual investors can only participate in this new instrument via funds.
