VDTH - Videocon

[hillfronter83]

IBKR is telling me they absolutely cannot trade the GDR (even though they trade other Indian GDRs listed in London)

 

Schwab isn't sure yet.  Legal dept still looking at it

 

IB told me VDTH shareholder will get India shares, which most global holders won't be able to trade. But according to this filing, ADS shareholders should get GDS shares: https://www.sec.gov/Archives/edgar/data/1629220/000119312518107154/d568181d6k.htm

 

[misterkrusty]

VDTH holders had the option to elect to receive the India-traded shares.  The default option was to get the GDR

[misterkrusty]

update:  IR confirmed my belief that the GDR is not subject to Reg-S, meaning that U.S. investors - including retail - should NOT be restricted from trading.  I think the legal dept at Schwab assumed incorrectly that it was Reg-S when I brought this up earlier.  Seems like nearly all Indian GDRs are Reg-S or Rule 144A, so that's likely the source of the confusion. 

 

As for IBKR, turns out the reason they can't trade is not related to the specifics of the security, but rather the fact that it trades on a part of the London exchange that IBKR doesn't have access to:  the IOBU  See:  https://www.lseg.com/iob/market-making  London-listed GDRs all trade on the International Order Book (IOB).  The IOBU is the part of this that is not cleared by a central counterparty, whereas the IOBE is.

 

I was able to buy a London-traded Indian GDR (LOTD) thru IBKR in the last trading session, so I'm assuming LOTD is in the IOBE, and further that IBKR has access to the IOBE.  I suggested to IR that they move to the IOBE if possible.

 

If anyone else learns more about this clusterf&*%, please post here.

 

 

[misterkrusty]

if anyone cares:

 

Schwab tells me they're still figuring out if they can trade this GDR.  The issue isn't legal, it's technical - i.e. they need to figure out how to clear the trades.  Which brings me to the second update...

 

The company tells me they're moving the GDR to the IOCE section - i.e. the one where trades are cleared by a central counterparty.  Currently it's in the IOCU section (not CCP cleared).  This should allow IBKR to trade it (they trade on the IOCE but not the IOCU), and this might clear things up for Schwab as well.  Company says the move should be done in a few days, which probably means in a few weeks (judging by the all the delays in this saga thus far, but whatever)

 

Fidelity can trade the GDR right now.

[hillfronter83]

if anyone cares:

 

Schwab tells me they're still figuring out if they can trade this GDR.  The issue isn't legal, it's technical - i.e. they need to figure out how to clear the trades.  Which brings me to the second update...

 

The company tells me they're moving the GDR to the IOCE section - i.e. the one where trades are cleared by a central counterparty.  Currently it's in the IOCU section (not CCP cleared).  This should allow IBKR to trade it (they trade on the IOCE but not the IOCU), and this might clear things up for Schwab as well.  Company says the move should be done in a few days, which probably means in a few weeks (judging by the all the delays in this saga thus far, but whatever)

 

Fidelity can trade the GDR right now.

 

Thanks for the update!

[writser]

Thanks for the update. I only have a small position so didn't really bother to find out what's happening. As of today I indeed see more automated trading activity on LSE. Your story makes sense, I guess we can trade it in a few days/weeks.

[misterkrusty]

liquidity should improve quite a bit.  the IOCU is a royal pain for market makers thus they avoid it

[misterkrusty]

the GDR can now be traded on IBKR as predicted.  I did a study of all the Indian GDRs traded on the LSE for which you can get price data on yahoo (so perhaps not a complete list).  No GDR with any volume (aside from this one) trades at more than a 3% discount to the local shares.  Currently DTVL is at a ~9% discount, so I would expect that to tighten up once people realize this thing is cleared by a central counterparty. 

 

Also, this seems to be the only Indian GDR that is not subject to Reg-S or Rule 144, so that means that US retail investors can trade it.  with a wider potential investor base I see no reason for a big discount in the long run.  I've thus held off on selling so far.

[writser]

I sold around ~$1.01 or a ~8% discount to 74 INR if I'm correct. I have no special insights regarding Dish TV India and I don't think exposure to a 'random' company with a possible ~6% extra upside in the long run is my best investment idea. Easy to drift into a new thesis here. Enough stuff that trades at a bigger discount and I'm not sure the gap will close in a few weeks / months / years. Also, I find it very hard to trade stuff like that. When do you decide to sell if the discount doesn't narrow?

 

That said, holding for a few more days / weeks is probably not the worst idea ever - there could be some selling pressure. It just fits me to sell and move on in marginal cases like this - before I get suckered in.

[misterkrusty]

I agree it doesn't make sense to hold if you've got some other idea with far more upside (and you don't have a ton of cash lying around).  in the meantime, these shares are hardly expensive