SK Hynix ADR and Korean Stocks to Open Swap at Month-End, Arbitrage Trading Difficult to Implement

SK Hynix ADR and Korean listed common stocks are expected to open for two-way conversion at the end of this month, but arbitrage trading is difficult to implement. The Korea Securities Depository (KSD) stated that the mutual conversion between SK Hynix ADR and Korean common stocks will be possible after the 29th, but several conditions must be met. Converting Korean common stocks into ADRs can only be done within the issuance limit set by the issuer. For example, if the ADR issuance limit corresponds to 1 million common shares and 900,000 shares have already been issued, only 100,000 shares remain available for new conversions. There are no separate issuance limit restrictions when converting ADRs back to Korean common stocks. Industry insiders point out that individual investors find it difficult to use this as a practical investment strategy, as the conversion process must be applied through brokers and involves foreign exchange procedures, with different brokers having varying methods, making it impossible to complete the conversion instantly like regular stocks.

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