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Why did my CDR fall if the currency is hedged?

A Canadian depositary receipt is a receipt for a slice of a share in a company listed somewhere else. You buy it in Canadian dollars on a Canadian exchange. The currency hedge takes most of the foreign-exchange move out. It does not take the company's move out. If the US stock falls, the CDR falls with it. One hundred CDRs are not one hundred shares. The ratio on the issuer's directory is how many shares each receipt stands for today.

Beginner guide · 8-minute read · Updated 2026-11-08

The short answer

Count the ratio before you count the receipts. A ratio of 0.10 means one CDR stands for about a tenth of one share. 100 CDRs are exposure to about 10 shares, not 100. The price you see is in Canadian dollars. A fall in the foreign stock shows up in that price. A move in the US dollar mostly does not, because the issuer changes the ratio. The live list, and today's ratio for each name, is the issuer's directory, not a list copied onto a page.

One hundred receipts, and a stock that fell

Here is one position (hypothetical). You own 100 Northwind CDRs, bought at $20 Canadian. That is $2,000. The ratio that day is 0.10, so this pile is about 10 US shares, not 100. The US stock is $200. The exchange rate does not move overnight. The US stock fell to $160, which is 20% lower. The CDRs fall to about $16. The 100 receipts are worth about $1,600.

The middle row is this account. The −$400 is the stock, in Canadian dollars. Selling the 100 CDRs at about $16 locks it in. Holding them does not put the $20 back. The hedge did not miss. There was no currency move for it to cancel. The last row is the same company drop, owned as real US shares. That holder is down 20% in US dollars and still has to convert to spend the money in Canada. You already took the drop in Canadian dollars, on a tenth of the share count a person might assume from the word "100."

How to read a brokerage statement shows 100 CDRs at today's Canadian price. It does not multiply by the ratio. You do that from the directory. Ten shares at $200 is the exposure you actually held. One hundred shares at $200 would have been $20,000 US, which is not what $2,000 Canadian bought.

The ratio moves so the currency does not

BMO describes the ratio as adjusted for the notional currency hedge as the foreign currency moves against the Canadian dollar. CIBC publishes each ratio on its CDR directory. Yesterday's ratio is not today's exposure.

Here is the other morning, with the same 100 Northwind CDRs. The US stock stays at $200. The US dollar moves against the Canadian dollar. The issuer changes the ratio so each receipt stands for a slightly different slice, and the Canadian price stays about $20. Your $2,000 is still about $2,000. You did not earn the currency move, and you did not lose it. A Canadian who held the 10 US shares with no hedge is the one whose Canadian-dollar value changed. The CDR holder who checks only the US stock chart, and not the ratio, will think the receipt is broken. It is doing the one job the hedge has.

The stock-drop morning and the currency morning can land on the same day. Then the Canadian price moves by about the stock's percent, and the ratio has also ticked. Read both numbers. Price times 100 is the account. Ratio times 100 is how much of the company that account is.

A CDR is not an ADR

An American depositary receipt is the other direction. A company from outside the US trades in the US, in US dollars. A Canadian depositary receipt is usually a company from outside Canada, often a US company, trading in Canada in Canadian dollars. The ADR often charges a custody fee, and that fee can come out of the dividend. The ADR fee on a statement is that line. A CDR does not use that line for the hedge. The hedge cost is inside the currency rate the issuer posts, which is the next section.

Options are a third product. A listed call or put on the receipt is a Montreal Exchange contract on 100 CDRs. CDR options explained is that contract. This page is the receipt itself. CDR options versus US options is the choice between the two option markets, after you already know the receipt is a slice.

Where the fee actually sits

CIBC says CDRs do not have an ongoing management fee, and that the FX forward used for the hedge includes a spread of up to 0.60% a year on average. A Cboe brochure has described that spread as under 0.50% a year. BMO has described the hedging cost as typically under 0.60% to 0.80% a year. Those are three descriptions of a cost that is not a commission on your confirmation. The directory line for that CDR is the rate in force, and it can differ from all three sentences. On a $2,000 position, a 0.60% year is about $12, spread across the year inside the forward, not a $12 ticket on the day you buy. The −$400 in the table is the stock. The spread is extra, and it is small next to a 20% drop.

In a TFSA or an RRSP the receipt is still in Canadian dollars, and the spread is still in the forward. The account type does not turn a fall in the US stock into a flat CDR.

The list is the directory, on the day you look

People search for a list of CDRs. The issuer keeps that list, with each ticker and today's ratio, on its directory. Copying it here would be wrong the next morning, because the ratio is adjusted as the currency moves. Use the directory for the name and the ratio. Use the account for the Canadian price and the share count. Multiply. That is the position. A page that freezes yesterday's ratio will tell you that you hold a different slice of the company than you do.

What to multiply before you call it a full share

Three numbers. The CDR count, 100. Today's ratio, 0.10 unless the directory says otherwise. Today's Canadian price, about $16 after this drop. Count times price is $1,600, down about $400 from $2,000. Count times ratio is about 10 US shares. Anything you read off a US chart has to be run through those two products, or you will think you own a hundred shares of a stock that only fell in US dollars.

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