SK Hynix ADR and Korean Shares to Open for Conversion by Month-End, Arbitrage Unlikely

SK Hynix's American depositary receipts (ADRs) and its common shares listed in South Korea are expected to open for two-way conversion by the end of this month, though individual investors' anticipated arbitrage trades are unlikely to materialize. According to Odaily, the Korea Securities Depository (KSD) stated on the 16th that mutual conversion between SK Hynix ADRs and Korean common shares will become possible after the 29th, the scheduled listing date for the newly issued Korean common shares. Actual conversion requires meeting several conditions. Converting Korean common shares into ADRs is limited to the ADR issuance quota set by the issuer. For example, if the ADR issuance quota corresponds to 1 million common shares and 900,000 have already been issued, only 100,000 shares remain available for new conversion. Conversely, converting ADRs back into Korean common shares has no separate issuance quota limit. Industry insiders believe it will be difficult for individual investors to use this as a practical investment strategy. Converting common shares into ADRs requires submitting a separate application through a brokerage and involves procedures such as foreign exchange conversion. The handling methods vary among brokerages, so the conversion cannot be completed instantly through mobile or online trading systems like regular stock trades.