CFA Level I · CFA Level I Exam · Equity Instrument Features
A foreign company wants its shares to trade in a US market through a depository receipt program that does not require it to comply with full SEC registration and reporting requirements, and that does not raise new capital. The program is most likely a:
A Level I ADR trading over the counter is the most likely program. It has the least regulatory burden and minimal SEC reporting, and raises no new capital. Level II needs an exchange listing and full registration, while Level III involves a public offering of new shares.
- Asponsored Level III ADR.
- BLevel I unsponsored or sponsored ADR traded over the counter.Correct
- CLevel II ADR listed on an exchange.
Explanation
Level I ADRs trade over the counter and have minimal SEC reporting requirements, and raise no capital. Level II requires exchange listing and full registration, and Level III involves a public offering to raise capital.
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