How to invest in CDRs in Canada

Fortunately, investing in foreign equities has never been easier for Canadians. Trading fees continue to edge downward for stocks listed on U.S. and international stock exchanges, and there are hundreds of low-fee exchange-traded funds (ETFs) invested in foreign stocks to choose from right here in Canada.

Plus, if you’re interested in specific global stocks—say, Nvidia or SAP—more and more equities are available in Canada in the form of Canadian depository receipts (CDRs). In the first quarter of 2025, Canada’s two CDR issuers, CIBC and BMO, expanded their roster of CDRs beyond U.S.-listed stocks to include stocks listed only in European and Japanese markets. About 100 leading global companies are now available in CDR form. You can get exposure to world-beating stocks, in other words, without leaving the comfort of Canadian markets.

What is a depository receipt?

A depository receipt is a security, issued by a bank, that trades on a stock exchange, much like stocks and ETFs. A CDR is invested entirely in a single underlying stock and so serves as a proxy for owning that stock. Indeed, the depository receipt will pay the same dividend yield as the stock and even grant the holder a say in corporate governance (with some limitations—see below). Why bother with this complicated structure? For certain investors, owning depository receipts instead of the stock itself offers advantages.

CDRs, first launched by CIBC in 2021, were predated by American depositary receipts (ADRs). These U.S.-listed proxies for foreign stocks gave American investors access to international equities without the often higher trading costs, foreign exchange fees and currency risk involved with holding those stocks directly. CDRs are designed to give Canadian investors the same convenience and cost benefits, only for stocks traded outside Canada, including U.S. stocks. CDRs trade on the Cboe Canada exchange.

What are the potential benefits of CDRs?

Investing in CDRs has three key advantages, compared with buying foreign stocks directly:

Depending on the fees your brokerage charges, CDRs may come with lower trading costs than the underlying stocks, because CDRs are traded on domestic rather than foreign markets and avoid brokers’ foreign exchange fees.

CDRs are typically priced at less than $50, making them easier to purchase than the full foreign shares, which can cost hundreds or even thousands of dollars. For example, if you balk at paying USD$950 for a single Netflix share, you can get essentially the same exposure by buying CIBC’s Netflix CDR (NFLX) on the Cboe exchange for under CAD$40. In this respect, CDRs are similar to fractional shares offered by some brokerages.

CDRs are notionally hedged into Canadian dollars. That is, you buy it for a price that reflects your equity holding at the exchange rate that day (similar to a CAD-hedged ETF). But price movements thereafter are hedged to track the ups and downs in the stock’s price in its home currency. This means there is no currency risk, and you will enjoy similar capital gains (and losses) as if you were investing in U.S. dollars, euros or yen.

What are the drawbacks of CDRs?

Canadian investors should be aware of these details before purchasing CDRs:

All these advantages come for a fee, albeit a small one. CIBC and BMO don’t charge direct management fees on their CDRs, but they do earn a cut of the currency hedging that goes into them. BMO says its annual hedging fee is “typically under 0.5% per year.” According to CIBC, the foreign exchange spread—the difference between Canadian-dollar buy and sell prices—amounts to a maximum of 0.8% per year on its global CDRs.

In the four years that CDRs have been available in Canada, their performance has not exactly tracked the stocks they mimic, largely due to the cost and imprecise nature of the hedging process. The CDRs of several notable stocks have lagged the gains of their models by a few percentage points per year.

Although they are listed in Canada, CDRs are treated like foreign stocks for tax purposes. In taxable accounts, dividends from CDRs do not benefit from the dividend tax credit like Canadian stocks do. CDR dividends are also subject to withholding taxes in the countries where the underlying stocks trade. For example, 15% if the underlying stocks are American. This is no different than if you owned foreign stocks directly, though.

CDR holders do not automatically receive voting materials and the other documents that shareholders do. If they want to participate in corporate governance, they must make their voting intentions known, often before the voting deadline, to the CDR issuer. They also can’t tender their securities directly to an acquirer in the case of a takeover bid but must instead sell at the current market price before the deal’s close.

Where can I buy CDRs in Canada?

You can generally buy CDRs using the same brokerage account or investment advisor you use to buy stocks and ETFs. Since virtually all CDRs represent sought-after multinational stocks, liquidity should not be an issue.

Take care, though, to ensure your orders are properly labelled—the ticker symbols used by CDRs often resemble those of the underlying stocks listed abroad. For example, CIBC’s Lululemon Athletica CDR goes by LULU on the Cboe exchange, exactly the same as LULU stock trading on the Nasdaq. The first will set you back 15 bucks Canadian, the second over USD$300.