BNY Mellon pitches for depository receipt regime review

It has pitched for the introduction of over-the-counter non-capital-raising DRs which would allow for the conversion of Indian shares into depository receipt

BNY Mellon, a global depository, has approached Indian regulators and the government for a review of the regulations governing Depository Receipts(DRs).

It has pitched for the introduction of OTC(Over-The-Counter) non-capital-raising DRs which would allow for the conversion of Indian shares into depository receipts without the company raising any capital.

The creation of such OTC instruments would allow global institutions who may be more comfortable with local instruments to take exposure to Indian companies, suggests the firm.  

BNY Mellon recently met with the Ministry of Finance, the Securities and Exchange Board of India and the Reserve Bank of India on the possibility of allowing such instruments, according to a statement from the organization.

“In permitting OTC non-capital-raising DRs, India would join 67 other countries that provide investors with access in this way, including Brazil, South Korea, South Africa and Turkey,” it said.

BNY Mellon officials believe this could potentially bring in billions of dollars of additional liquidity to the Indian markets.  

 “Not only do they broaden the range of investors who participate in capital markets, adding a DR programme can also enhance the liquidity of an issuer’s securities and result in a higher valuation,” said their press statement.