With the obligatory apologies for the length of this post ...
... a couple of weeks ago I emailed MR .. re the ' mechanics ' of the Prima Nasdaq listing ... and as usual he kindly replied ....
.... and this response is given as the next , separate post ... because it follows on from this post....
It will take longer than 3 minutes.. so move on if you couldn't be bothered... or pop on the kettle ... or blow the dust off a nice red ( for our SW WA's ? )
The PRR Capital raising currently has the Prima Biomed share price in what can only be described as a 'holding pattern ' .... whilst we await the Share Purchase Plan to be completed... at the end of the month ... it is firmly 'tethered to the $0.28 purchase plan offer ...
... unless something / news / appears out of ' left field ' ... ' .. and from today's post ... so succinctly ' lit ' by the Texas (Hey ya awl) BBQ ....
there seems to be some confusion re the 'mechanics ' of the Nasdaq Listing of Prima ... that is coming .... soon ! _________________________________
Some 101 on Prima Listing on the Nasdaq in the US ....
??Prima will list on the Nasdaq with the ticker PBMD.
??PBMD will be a Level 11 American Depositary Receipt (ADR) listing on the Nasdaq....
... typically, Level 11 Depositary Receipt issuers have already entered the U.S. marketplace as Level I issuers. ... Prima is currently listed on the OTC pink sheets Level 1 as PRRUF.
... a Level 11 Depositary Receipt issuer does not register a 'public offering ' .... no new Prima shares will be issued for the Nasdaq listing ... all shares will come from those already issued on the ASX only
Because Prima is an Australian company ... US investors have difficulty in buying shares from other countries such as Australia which trade at different prices and currency values ... and this is where the ADRs come into play ...
The Bank of New York Mellons (BNYM) has been given the nod to facilitate and manage Prima's share trading in the US ... in the form of ADRs... BNYM is called a ' market maker' .... they are a securities dealers that buy or sell securities for which they quote prices.
BNY Mellon 'promotes' itself as the world's leading depositary bank, with a 64 % market share of worldwide DRs.
An American Depositary Receipt for Prima will be a negotiable certificate that will represent Prima's publicly traded shares.
The BNYM will purchase the PRR's shares on the ASX stock market and then 'deliver' them to the depositary's local custodian bank .... which then instructs the depositary bank to issue Depositary Receipts.....
These Depositary Receipts then may trade freely on the Nasdaq , just like any other security on that exchange.
When the official announcement is made that Prima will list on the Nasdaq .... it is effectively given 10 days notice until it actually happens...
The BNYM can officially start purchasing large lots of PRR shares ( if it wishes to ) .... and then 'bundles' these shares into groups and reissue them on the Nasdaq. BNYM can effectively ' inventory shares ' ready for sale.
... The depository bank sets the ratio of U.S. ADRs per home country share.......
...This ratio we have been told of PRR : PBMD will be 30:1... which means that one PBMD ADR share represents 30 shares of Prima ASX .
The majority of ADRs in the US range in price from $10 to $100 per share..... ... as PRR shares are worth considerably less in Australia ... each PBMD ADR will represent 30 x real shares.....
Prima will benefit from these ADRs on the Nasdaq because it gives them U.S. exposure ... allowing them to tap into the rich North American equity markets.... and through this broadened and more diversified investor exposure there is potential for greater liquidity.
in particular a market that has an appetite for Biotechs and more risk than the narrow focussed 'resources minded ' Australian share market
In return, Prima must provide detailed financial information to the sponsor bank BNYM ... and the compliance of financial detailing is quite onerous .....and is what we are led to believe the reason as to why the PRR Nasdaq listing has been delayed .... whilst they correct the compliance issues on their application to list ... which has been referred to as .... the 'Questions'
For the US investor the main objective of ADRs is to save them money by reducing administration costs and avoiding duty on each transaction..... For individuals in the US ... ADRs are an excellent way to buy shares in a foreign company and capitalize on growth potential outside North America....
US investors will be able to purchase Prima Depositary Receipts through their own full-service, discount, and on-line brokerage firms throughout the United States.... exactly the same form as us here in Australia ...
ADRs are bought in exactly the same way as common stock. .... they will typically trade, settle and clear in the same manner as securities local to the market on which they are trading ... this alleviates certain obstacles and expenses associated with cross-border investing.
..... For Prima it also helps broaden and diversify their shareholder base with potentially greater liquidity, benefit share valuations and also's Prima's convey a global commitment.... particularly in the US
... typically a Nasdaq listed company, by its very nature of being there in the US ... will attract some serious media attention ... interestingly... as a generalisation.. Americans don't look at anything outside of America.
When Prima lists on the Nasdaq ... it will allow for US institutions with foreign investment restrictions ... to diversify globally and minimize global custodian fees.... because it is listed in the US
When Prima lists in the US it is attractive to them because ...
... PBMD will be quoted in U.S. dollars
... it removes the obstacle that many mutual funds, pension funds and other institutions may have in purchasing and holding securities outside of their local market.
... It will eliminate global custodian safekeeping charges, potentially saving Depositary Receipt investors up to 10 to 40 basis points annually.
I will offer familiar trade, clearance and settlement procedures.
The demand by investors for Depositary Receipts has been growing between 30 to 40 percent annually, driven in large part by the increasing desire of retail and institutional investors to diversify their portfolios globally... all good news for PRR entering the 'market'
Many of these investors typically do not, or cannot for various reasons, invest directly outside of the U.S. and, as a result will be able to buy PBMD Depositary Receipts as a means to diversify their portfolios ... perhaps as an addition to their DNDN Dendreon shares .
Prima ADRs / PBMD shares will trade like other U.S. securities .... they can be freely sold to other investors.
they can simply trade by transferring them from the existing Depositary Receipt holder (seller) to another Depositary Receipt holder (buyer)... in an ' intra-market transaction.'.....
An intra-market transaction is settled in the same manner as any other U.S. security purchase in U.S. dollars on the third business day after the trade date ... this is called a t+3 trade. Intra-market trading accounts for approximately 95 percent of all Depositary Receipt trading in the market today.
When BNYM issues PBMD on the Nasdaq... as the market develops, the majority of Depositary Receipt purchases will be issuances .....
... eventually the number of PRR shares it will typically put on offer in the US (as an ' adequate ' amount ) is usually three percent to six percent of the PRR's total shares.... which should be enough to develop true intra market trading
... when trading PBMD in the US ... BNYM will seek to obtain the best price by comparing the Depositary Receipt price in U.S. dollars .... to the dollar equivalent price of the PRR shares on the ASX ... they will effectively buy and sell them back and forth between the 2 markets to equalise the markets ...
The continuous buying and selling of Depositary Receipts in either market will tend to keep the price differential between the Australia and U.S. markets to a minimum. .....
... typically about 95 percent of Depositary Receipt trading in the US is done in the form of intra-market trading ..... and does not involve the issuance or cancellation of a Depositary Receipt....
... and in conclusion ... the action for Prima just may start once the Nasdaq listing is announced ... with the current PRR share price cheap... discounted ... 'artificially ' lowered temporarily by the SPP .... $0.28 offer ... it may just entice the Market maker pull out their big wallets ....
let the games begin .....
PRR ... the Lifechanger
.... Time for a beer
PRR Price at posting:
25.4¢ Sentiment: LT Buy Disclosure: Held
(20min delay)