The Comisión de Valores Monetarios (CVM) changed the rules for investments in Spanish Certificates of Deposit (BDRs). The change will take effect from 1 September and will facilitate the purchase of foreign assets for small and medium-sized investors.
Currently, there are two ways to apply to foreign giants like Google. The first and most complicated is to open an account with an international broker and trade the shares directly abroad. This requires a high level of knowledge and experience in the financial market, as well as being a risky move.
The Spanish Stock Exchange
To simplify the process, Spanish financial institutions can buy shares abroad and sell their certificates on B3, the Spanish Stock Exchange. Investors who buy these certificates do not invest directly in the company’s shares, but in representative securities. The real share is blocked as a ballast of currencies and serves as a guarantee for the certificates sold here.
Does it seem complicated? Imagine a television model that, for some reason, cannot be brought to Britain. The consumer then brings only the receipt for the purchase. When he arrives in São Paulo, he sells the newspaper to someone else. In fact, the television is kept in a safe in the United States and what is marketed is only the “certificate” of purchase. In general terms, this is how international shares are traded here.
In the financial market, these certificates are called BDRs. They can be of two types:
- Sponsored, when the initiative to market them in Britain comes from the foreign company itself. In this case, it contracts a Spanish institution to make its BDRs available in B3;
- Not sponsored, when the national institution acquires the shares and sells its certificates on its own, without having direct contact with the company. This is the case with the BDRs of large companies such as Facebook, Amazon and Google.
Unsponsored BDRs
So far, non-sponsored BDRs can only be acquired by “classified” investors, i.e. those who have more than GBP 1 million available for investment. This is exactly what changes with the new CVM rule.
From September, smaller investors will also be able to buy non-sponsored BDRs, provided they come from exchanges considered important, such as New York, London and Tokyo, for example.
In this way, the BDRs of the global technology giants will be more accessible to small and medium-sized investors, who will be able to diversify their applications and expand them to more products in the financial market.