Discussion
Issuance of DRs is based on the increase of demand in the
Answer: B
Correct answer: International market.
A depositary receipt programme is set up because investors outside the issuer's home country want exposure to its shares but face obstacles in buying them directly - foreign account opening, currency conversion, unfamiliar settlement, and mandates that restrict some institutions to locally traded securities.
The receipt removes those obstacles by turning a foreign share into a locally traded instrument. Local demand needs no such device, since domestic investors can already buy the underlying shares on their own exchange; the whole point of the instrument is to reach beyond that market.
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