Trading in ADRs
Market participants
Deutsche Bank Trust Company Americas is the depositary bank for the Stora Enso ADRs and Nordea Bank is the Finnish custodian for the ordinary Stora Enso shares which back up the ADRs issued by Deutsche Bank Trust Company Americas. The depositary bank plays a key role in the listing process and issuance as well as cancellation of ADRs. It also maintains the ADR holder register and distributes the dividends in US dollars.
The custodian, i.e. Nordea Bank, is the overseas correspondent of Deutsche Bank Trust Company Americas, holding the ordinary shares underlying the ADRs.
Deutsche Bank Trust Company Americas is a DTC (Depository Trust Company) participant as are brokers and dealers, other banks, trust companies and clearinghouses. DTC is the national depository, such as Finnish Central Securities Depository of NASDAQ OMX Helsinki, that owns the system permitting computerized transfers of book-entry securities for the participants.
Trading in ADRs
ADRs can be traded either by trading existing ADRs or purchasing the shares in the issuer’s home market and having new ADRs created, based upon availability and market conditions on the markets in question. When trading in
existing ADRs, the trade is executed on the secondary market on the International OTCQX through DTC without involvement from foreign brokers or custodians. The process of buying new,
issued ADRs goes through Finnish and US brokers, NASDAQ OMX Helsinki and DTC as well as Deutsche Bank Trust Company Americas and Nordea Bank as follows:
In order to sell Stora Enso shares the investor has to have the ADRs cancelled or have them sold on the secondary market, i.e. International OTCQX, to another investor through a broker and the DTC. In the cancellation process the US broker delivers the ADRs to Deutsche Bank Trust Company Americas to have them cancelled. Deutsche Bank Trust Company Americas then cancels the ADRs and instructs Nordea Bank to release the underlying shares and deliver those shares to the buyer’s custodian.
The exchange rate
The exchange rate between Stora Enso ADRs and Stora Enso Series R ordinary shares, as can be seen in the picture above, is 1:1, i.e. one ADR represents one Stora Enso Series R share.
