Fidelity forced conversion of international shares to ADR

[thepupil]

I bought some Singapore listed shares last night. I woke up to owning a US listed ADR. Has this happened to anyone?

 

I prefer to own the shares on the singapore exchange.

 

I'll contact Fido just wondering if anyone else has had this happen.

[Gregmal]

Ive had it happen a few times. Was a pain because with some managed accounts we have outside compliance. They are big pussies and only worry about regulatory CYA stuff. So in the couple instances, IIRC, it was with Razer, Hamilton Thorne, and Xiaomi...I put the orders in through the trade desk and we get filled on the specific exchanges. And then a day later all of which are listed in the accounts as the US pink sheet ADRs. And the compliance guys are having a heart attack because "do you know how bad it looks to regulators buying pink sheet penny stocks!!!!!".....I never really got an answer why this occurs, and even after explaining to the tards in compliance that the businesses are all legit and that the ADRs are no big deal, it still continued being a headache.

 

So yea, no idea why it happens, but it does. When selling its just the reverse process and equally no big deal, at least when dealing with the trade desk. Not sure how simple it would be if you are putting the order in yourself as the ADR is likely trading during different hours than the ticker on its native exchange.

[thowed]

Only other thing I can think of, though I'm sure you thought of, is whether Fidelity didn't like the 'blocks' of shares you have to buy in Singapore stocks.

[Gregmal]

I was bored and made a call to one of the guys at one of the trading desks at one of my clearing firms to ask about this and the response was that most likely the firm has inventory of said security on hand. Makes sense because Ive had orders filled for tickers on others exchanges without seeing a corresponding volume bump the same way I would if say I bought 500 shares of GRIF(just an example as its something you can clearly see your own volume in) or something in the open market.

[thepupil]

as an FYI, this was Jardine Strategic.

 

On Sunday night (Monday morning in Singapore), I was able to seamlessly sell the Strategic in Singapore and buy Matheson. Instantaneously, the Matheson I purchased in Singapore became the Matheson ADR and my Strategic ADR's went away. So it didn't really cause any issues (maybe Fidelity does it to get some ADR fee which I don't notice lol)

 

With another Fidelity account that is a) not margin b) not set up for international, I had come friction not being able to transact in Singapore and that cost me, but that was my own fault procrastinating setting that account up appropriately.

 

[rosemontseneca]

Same issue, but I got foreign ordinaries (JDSHF and JARLF), not ADRs. I think since they are dollar denominated fidelity shows them using the foreign ordinary ticker but you can trade them on Singapore exchange seamlessly using local J37/J36 tickers. 

 

I called Fidelity on it when I first bought J37 and got JDSHF thinking it was some mistake, and they said they are the same security so it doesn't matter.  Didn't realize that.

[thepupil]

I am probably misusing the term ADR. I now own JARLF as well in Fidelity.

[TwoCitiesCapital]

I am probably misusing the term ADR. I now own JARLF as well in Fidelity.

 

ADRs are American Depository Receipts. These are sponsored by the issuing company who works with a bank/custodian to issue shares into custodian account and issue ADRs as claims on shares in that custodial account.

 

You can own foreign shares directly - they just trade OTC and will have way less liquidity as it's not sponsored or backed by millions of shares in custody.

 

Most ADRs have a 5 digit ticker ending in Y (i.e. TCEHY for Tencent)

 

Foreign shares traded OTC will end in F (i.e. FRFHF for Fairfax trading OTC).

 

 

[writser]

Yeah, this is not a conversion. Check out the ISIN of JARLF: BMG507361001 . BMG means country of domicile is Bermuda. That's not an ADR, an ADR is a US domiciled instrument and as such it's ticket always starts with USxxxxxx. Even more important, you can see that the ISIN of the Singapore listed stock is also BMG507361001 ( https://links.sgx.com/1.0.0/corporate-information/1327 ). ISIN's are unique so this means that you still own the same instrument. No wrapper, no anything, this is literally the stock that is traded in Singapore.

 

Stocks can be traded on different exchanges and the resulting positions are held in different depots. E.g. BMG507361001 is tradable in Germany, Singapore and the US. Now, if you buy in Germany and you sell in Singapore on the same day you have a problem because these positions are held in different depots and as such will not cancel each other out. But your broker can usually facilitate this with a depot transfer, i.e. ask them to transfer the shares held in Germany (at Euroclear or whatever) to Singapore.

 

So the one thing that could have gone wrong here is that your broker decided autonomously to transfer your SG shares to the US depot and if you want to sell them in Singapore you have to ask your broker to transfer them back. I think it is very unlikely that this happened because such a transfer actually costs money and this is definitely not something that happens arbitrarily / automatically. If I had to guess I'd say that you are just experiencing a software issue where your broker messes up the ticker and if you sell in Singapore everything will be fine. But I'd check that just to be sure. Or try to sell one share in Singapore, see what happens.

 

If you would own JMHLY (check it out, it has a US ISIN) that would actually imply a conversion and that would be REALLY strange. Because suddenly you'd own a different instrument with potential different tax treatment, withholding taxes, ADR fees, etc. That is definitely not something a decent broker should be able to do without your consent.