StanChart IDRs up 5% as Sebi allows conversion

Indian depository receipts (IDRs) of Standard Chartered were up more than 5 percent after the Securities and Exchange Board of India (Sebi) allowed partial conversion of IDRs into underlying shares.

The capital market regulator’s move is aimed at improving liquidity in the instrument by making more attractive for investors.

“To retain the domestic liquidity, it is decided to allow partial fungibility of IDRs (ie redemption/conversion of IDRs into underlying equity shares) in a financial year to the extent of 25 percent of the IDRs originally issued,” a Business Standard report said quoting Sebi circular.

[caption id=“attachment_434750” align=“alignleft” width=“380”]  Reuters[/caption]

IDRs are depository receipts denominated in rupees. Shares underlying the IDRs are deposited with the custodian, who holds the shares on behalf of the depository, according to the report.

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Though IDRs were introduced a few years back, Standard Chartered is the only foreign company to have listed IDRs here.

The Sebi move follows a proposal in the 2012-13 budget to allow two-way fungibility of IDRs, subject to a ceiling. The proposal was aimed at increasing the participation of foreign companies in the domestic capital market.