KSD plays a role of issuing Korean Depository Receipts (KDR). In the event that foreign stocks are issued and listed in the Korean market, KSD supports the stocks' listing through stock administration agent service other than foreign company's own issuing KDR.
Procedures of KDR depository service
- KDR conversion
In case KDR's price is more expensive than that of underlying shares, investors can convert the underlying shares into KDR and sell it in the Korean market. This is an arbitrage transaction that investors can take advantage of price differences.
- KDR release
In case underlying share's price is more expensive than that of KDR, investors can take advantage of price differences through claiming on KSD for KDR release, and then selling the underlying shares in a foreign market.
The difference between foreign stocks and KDR issuance