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===[[Depositary receipt]]s and hostile governmental action=== | ===[[Depositary receipt]]s and hostile governmental action=== | ||
Now imagine that rather than [[Nationalization, Insolvency and Delisting - Equity Derivatives Provision| | Now imagine that rather than [[Nationalization, Insolvency and Delisting - Equity Derivatives Provision|nationalizing]], a national government announced some draconian law preventing corporations in its jurisdiction from accessing the international capital markets even through [[depositary receipt]] programmes — you know, something crazy like that.<ref>Attentive readers may wonder whether this is really a figment of the [[JC]]’s imagination, or something the Russian State ''Duma'' actually did, in April 2022.</ref> So say, ooh: the DRs must be converted into underlying shares within a stipulated period, failing which the underlying shares lose their dividend and voting rights<ref>And therefore become largely worthless: they entitle a holder to a pro-rata share of the {{eqderivprov|Issuer}}’s assets on a ''non-insolvent winding up'' or something like that — but who ever wound up a non-insolvent company?</ref> | ||
The common sense (and economically correct) answer is “however it shakes out, this is all the customer’s risk” — remember the synthetic equity mantra: ''this is just equity brokerage done with swaps''. Imagine what would happen, dear customer, had your broker sold you the ADR outright, a year ago, and now it has been unwound by wartime governmental manoeuvre. Whose problem would that be? Not your [[equity broker]]’s, for sure. | The common sense (and economically correct) answer is “however it shakes out, this is all the customer’s risk” — remember the synthetic equity mantra: ''this is just equity brokerage done with swaps''. Imagine what would happen, dear customer, had your broker sold you the ADR outright, a year ago, and now it has been unwound by wartime governmental manoeuvre. Whose problem would that be? Not your [[equity broker]]’s, for sure. | ||