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China pauses GDR approvals

The CSRC is doing so because of concerns about arbitrage investors.
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China’s securities regulator is pausing approvals for new applications to sell global depositary receipts, Bloomberg reported, citing unnamed sources.

The reason for the pause is in part at least because investors who buy GDR shares are doing so for arbitrage reasons, waiting to convert them into shares in mainland China at a higher price.

GDRs trade primarily in Zurich and tend to trade at discounts. They become fungible with A-shares in mainland China after a 120-day wait.

The China Securities Regulatory Commission said last month it was considering introducing new rules for GDR offerings, although it has not said anything publicly about pausing approvals.

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