The Jamaica Stock Exchange Depository Receipt Market Coming Soon.
What is a Depository Receipt (DR)?
A depository receipt is a negotiable financial instrument issued by a Brokerage House or a Member Dealer to represent a foreign company’s publicly traded securities. The depository receipt trades on a local stock exchange, in this case the Jamaica Stock Exchange. Depository receipts facilitate the buying of shares in foreign companies, because the shares do not have to leave the home country. This now means that shares of companies that are listed on a reputable stock exchange such as the New York Stock and London Stock Exchange, shares can be traded on the Jamaican Stock Exchange, without these shares actually being listed on the Jamaican Stock Exchange.
A depository receipt typically requires a company to meet a stock exchange’s specific rules before listing its stock for sale. For example, a company must transfer shares to a brokerage house in its home country. Upon receipt, the brokerage uses a custodian (in this case the Jamaica Central Securities Depository) connected to the stock exchange to custody the depository receipts. This connection ensures that the shares or stock actually exist and no manipulation occurs between the foreign company and the international brokerage house.
