Brazilian banking giant Bradesco has become the fourth financial institution to be selected to issue unsponsored level 1 Brazilian depository receipts (BDRs) on Brazil's equity and derivatives market, BM&F Bovespa.
Unsponsored BDRs represent the securities of foreign companies headquartered overseas and listed on a foreign exchange, and are not subject to any agreement with the issuer of the securities. The BDR issuer assumes liability for the legitimacy and integrity of the underlying asset of the BDR held by a custodian overseas.
Bradesco joins Citibank's custody division and Deutsche Bank S.A. – Banco AlemÃ£o, the German custodian's SÃ£o Paolo subsidiary, which have each issued programmes for 10 companies, as well as ItaÃº Unibanco which has registered to issue unsponsored BDRs.
Bradesco will have 60 calendar days in which to present BM&F Bovespa and the ComissÃ£o de Valores MobiliÃ¡rios (CVM), the Brazilian securities regulator, with the necessary documentation to register 10 unsponsored level 1 BDR programmes.
The Bradesco programmes must include foreign companies that do not yet have BDRs traded on BM&F Bovespa, which are headquartered in the United States and listed on US stock exchanges.
Until recently, BDRs could only be traded by financial institutions, investment funds, asset managers and stock consultants authorised by the CVM. On 24 March, the CVM issued an amendment, Instruction 493, which allows supplementary private pension plans and individuals and companies with financial investments of over B$1 million to trade Level 1 BDRs, sponsored or not. Other individual investors can only participate in this instrument via funds.