International Markets:
Financial Products
Investing in international markets provides diverse opportunities but also
requires careful consideration of legal and regulatory frameworks. This
presentation highlights financial products across borders.
by Kanaka Durga
1. International Depository Receipts (IDR)
ADRs (American DRs)
GDRs (Global DRs)
Issued by U.S. banks, representing shares in foreign companies. Traded on
Traded on multiple international markets to facilitate capital raising for
U.S. exchanges, allowing American investors to access foreign markets.
foreign companies, offering access to diverse currencies.
Infosys ADRs
Tata Motors GDRs
These ADRs are listed on the New York Stock Exchange (NYSE) and allow
These GDRs are listed on the London Stock Exchange and allow European
American investors to buy shares in Infosys
and other international investors to buy shares in Tata Motors, an Indian
company.
International Depository Receipt (IDR): Definition and Uses https://www.investopedia.com/terms/i/idr.asp
IDRs
Regulation
With reference to India, allowing foreign companies to raise funds in the
Regulatory bodies like the SEC and SEBI oversee issuance and ensure
Indian market through depository receipts denominated in Indian Rupees.
compliance with disclosure requirements and investor protections.
2. Loans & Financing
Instruments
Syndicated Loans
Trade Finance
Loans provided by a group of
Facilitates international trade
lenders, spreading risk and
through instruments like Letters
enabling large projects or
of Credit and Documentary
acquisitions.
Collections, ensuring payment
security.
Regulation & Standards
1
National banking authorities set regulations for
2
International standards like Basel III establish capital
international loans and trade finance products.
requirements for banks engaging in cross-border lending.
3. Equity Instruments
FDI
Equity Shares
Ownership stake investments by
Companies can issue shares in
companies or individuals in one
foreign markets to raise capital,
country in business interests in
subject to local regulations.
another.
Eg : China (OBOR) One Belt One
Road FDI in a range of
infrastructure programs throughout
Africa, Asia, and even parts of
Europe.
4. Derivatives & Risk
Management
Currency Swaps & Options
Help manage exchange rate risks, involving exchanging
principal and interest payments in different currencies.
Forward Contracts
Agreements to buy or sell an asset at a future date for a price
agreed upon today, hedging against currency fluctuations.
Risk Management is Hedging example Currency Hedging
5. Insurance Products & Compliance
1
2
Political Risk
Credit
Protects against losses due to political events like expropriation or civil unrest.
Protects exporters against non-payment by foreign buyers due to insolvency or other
issues.
Export Credit Agencies offer Export Credit Insurance often covers political risk and
credit as well eg EXIM Bank in the US