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Question

What is a CDI?

Answer

A CREST Depository Interest (CDI) is a UK security that is designed to represent a stock traded on an exchange outside the UK.

Under UK law, international shares cannot be transacted directly in CREST, so a CDI is created to facilitate trading in some foreign stocks and enable these to be settled through CREST. In practice, for each share which is in the form of a CDI, CREST has the equivalent number of shares held in its name at the central securities depository in the company's home country (these are the foreign equivalents of CREST - i.e. Euroclear in most of Europe and Clearstream in Germany).

CREST issues CDIs for each share of an eligible foreign stock - one CDI is the equivalent of one share of the underlying foreign stock. As a result, CDIs are an English law instrument which mean that trades in them can be settled through CREST like a regular share.

However, it is worth noting that a CDI is traditionally not listed on the London Stock Exchange and are usually traded off-exchange. The tax treatment of CDIs is the same as applies to the underlying shares and Dividends on CDIs will be subject to the same withholding taxes and Tax reporting requirements of the Foreign Country.

As a result, Barclays Stockbrokers only offer the ability to hold or trade a limited number of CDIs for retail clients - the proposed Verizon CDIs, resulting from the Vodafone Corporate Action, will not be made available to hold.

 

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