How to invest in CDRS in Canada

Fortunately, investing in Canadians has never been easier. Stocks listed on the U.S. and International Stock Exchanges, trading fees continue to drop down, and there are hundreds of low-paying exchange funds (ETFs) invested in foreign stocks, which are available from here in Canada.

Also, if you are interested in a specific global stock – NVIDIA or SAP, for example, more and more stocks are available in Canada as Canadian deposit income (CDR). In the first quarter of 2025, two Canadian CDR issuers CIBC and BMO expanded their CDR rosters to stocks other than U.S. listed stocks, including those listed only in the European and Japanese markets. Now, about 100 leading global companies are available in CDR. In other words, you can access stocks around the world without leaving the comfort of the Canadian market.

What is a deposit receipt?

A deposit receipt is a margin issued by a bank that is traded on a stock exchange, just like stocks and ETFs. CDR is completely invested in a single underlying stock and is therefore an agent that owns that stock. Indeed, deposit receipts will pay the same dividend yield as stocks and will even be granted to holders to comment in corporate governance (some restrictions, see below). Why bother with this complex structure? For some investors, having deposit income rather than stocks has its own advantages.

The CDR, first launched by CRC in 2021, was expected by the U.S. Storage Receipt (ADR). These U.S. listed agents targeting foreign stocks allow U.S. investors to use international stocks without the transaction costs, foreign exchange fees and monetary risks of holding these stocks directly. CDR is designed to provide Canadian investors with the same convenience and cost benefits and is only applicable to stocks outside Canada, including U.S. stocks. CDRS trades on the Canadian CBOE Exchange.

What are the potential benefits of CDR?

Compared with direct purchase of foreign stocks, CDRS investment has three key advantages:

1. Depending on the fees of your brokerage fee, the transaction cost of CDR may be lower than the underlying stocks, as CDRs are traded in domestic rather than foreign markets and avoid brokers’ foreign exchange fees.
2. The price of CDRs is usually less than $50, making it easier to buy than all foreign stocks, which can cost hundreds or even thousands of dollars. For example, if you pay $950 for a single Netflix share, you can get essentially the same exposure by buying CAD $40 below CAD on CBOE Exchange. In this regard, CDRs are similar to the fraction stocks offered by some brokers.
3. Conceptually, the CDR is in line with the Canadian dollar. That is, you buy at the exchange rate that day (similar to the CAD-HEDGED ETF) to reflect the price you hold on your equity. But subsequent price changes will be hedged to track the price fluctuations of stocks. This means that without currency risk, you will enjoy similar capital gains (and losses) as if you are investing in US dollars, euros or yen.

What are the disadvantages of CDR?

Canadian investors should know these details before buying a CDR:

• All of these advantages are charged, albeit small. CIBC and BMO do not charge direct management fees for CDR, but they do make a hedge for currencies cuts. BMO said its annual hedging expenses are “usually below 0.5% per year.” According to CIBC, the global CDR for the spread of foreign exchange (the difference between Canadian dollar buying and selling) has a maximum of 0.8% per year.
• During the four years that Canadian CDRs have been available, their performance has not fully tracked the stocks they mimic, largely due to the cost and inaccurate nature of the hedging process. The CDRs of several famous stocks lag the returns of their models by several percentage points each year.
• Although they are listed as Canada in Canada, CDRs are considered foreign stocks for tax purposes. In a taxable account, the dividend of the CDR does not benefit from the dividend tax credit like Canadian stocks. In countries where underlying stock trading, CDR dividends are also subject to withholding tax. For example, if the base stock is American, it is 15%. However, this is no different from owning foreign stocks directly.
• CDR holders will not automatically receive voting materials and documents provided by other shareholders. If they want to participate in corporate governance, they must know their voting intentions to the CDR issuer before the voting deadline. In the case of a bid for the acquisition, they cannot directly bid their securities to the acquirer and must be sold at the current market price before the transaction is settled.

Where can I buy CDRs in Canada?

Typically, you can purchase CDRs using the same brokerage account or investment advisor that you buy stocks and ETFs. Since almost all CDRs represent highly sought-after multinational companies, liquidity should not be an issue.

Be careful, however, to make sure your order is marked correctly – the stock symbol used by CDRs is usually similar to the symbol of the underlying stock listed abroad. For example, CIBC’s Lululemon Athletica CDR is conducted with Lulu on CBOE Exchange, exactly the same as Nasdaq stock trading. The first one will make you back $15 Canadians, and the second one is over $300.