Canadian Depositary Receipts: US Stocks in Canadian Dollars, and What the Hedge Costs

A Canadian Depositary Receipt is a way to own a share of a foreign company without owning the share. CIBC buys the real shares, holds them, and issues receipts against them that trade on the Toronto Stock Exchange in Canadian dollars. You buy the receipt. CIBC holds the stock. Your receipt entitles you to a fixed slice of it, plus the dividends it pays, minus whatever the tax authorities take on the way through.

The appeal is obvious the first time you try to buy a US stock from a Canadian account. Buying Tesla on the Nasdaq means converting Canadian dollars into US dollars, paying whatever your broker charges to do it, holding a US dollar balance you now have to manage, and converting back when you sell. Buying the Tesla CDR means placing a normal order, in Canadian dollars, on a Canadian exchange, for about thirty dollars a unit. No conversion, no US dollar account, no round trip.

There are 133 of these listed as of September 22, 2026, and every one of them trades on the Toronto Stock Exchange under its own ticker, alongside Canadian companies.

Where the company is listed	Number of CDR series
United States	115
France	6
Germany	5
Switzerland	4
Netherlands	2
Denmark	1
Total	133

Every CDR also carries the words “CAD Hedged” in its name, and that is the part this guide is really about. The hedge is the reason a CDR exists, it is the reason the price behaves the way it does, and it is not free. CIBC says so on its own FAQ page. What CIBC does not publish, but what can be computed exactly from the data it does publish, is how much it actually costs. The answer, across the 64 US CDRs with a complete two-year record, is between 2.11% and 2.85% a year. Not one of them was free.

What you actually own

A share gives you a claim on a company. A depositary receipt gives you a claim on a custodian who holds the share. The economic exposure passes through; some of the rights do not.

What passes through:

– Price. If the underlying share rises 10% in its own currency, your receipt rises about 10% in Canadian dollars, subject to everything below. – Dividends. CIBC states that dividends on the underlying shares are passed through to CDR holders, less applicable withholding taxes, converted into Canadian dollars on the day the custodian receives them. – Splits. CIBC states that holders “experience the same economic impact of a share split or consolidation as they would if the underlying shares were held directly”. A two-for-one split either doubles the CDR Ratio or splits the CDRs.

What does not:

– Votes. CDR holders cannot exercise the voting rights on the underlying shares directly. CIBC runs voting instructions through the corporate actions page of the CDR website, subject to identification requirements. If you own a direct share through a Canadian broker, your proxy is passed through to you in the normal way. – Eligibility, if you are American. CIBC’s terms bar any “United States person” within the meaning of section 7701(a)(30) of the US Internal Revenue Code from holding CDRs of any series. A dual citizen or a green card holder living in Canada is a US person for that purpose, and the CDR route is closed to them no matter where they bank. The direct shares are not.

There is one more practical difference worth knowing before you place an order. A CDR’s liquidity is not its own trading volume. CIBC’s guidance is that a CDR behaves like an exchange-traded fund: the volume that matters is the underlying’s, so a CDR can trade very little on a given day and still carry a tight spread, because the deep market in the underlying sits right next to it. CIBC’s own practical advice follows, and it is the advice that suits any thinly traded listing: use a limit order rather than a market order. If the difference between those two is not yet second nature, our guide to how to buy your first stock works through what each order type does to your fill.

The CDR Ratio, and why it changes every single day

Each CDR represents a fraction of one underlying share. That fraction is the CDR Ratio, and CIBC publishes it daily for every series.

On September 21, 2026, one Tesla CDR represented 0.06172924 of a Tesla share. About one sixteenth. That is why the CDR trades around $32 while Tesla trades around $375 US: CIBC sizes the ratio at launch so the CDR starts life at a convenient Canadian price. Across the 106 US CDRs where the arithmetic can be reconstructed, the median receipt opened at $21.14, and 82 of them opened between $15 and $25.

Here is the part nobody explains properly. The ratio is not fixed. It moves every day, and it moves because of the currency hedge.

CIBC’s own description of the mechanism, from its CDR frequently asked questions:

The notional currency hedge for CDRs is managed on a daily basis by CIBC to ensure that investors have as close to the full notional of the underlying currency hedged as possible. CIBC incorporates any gains or losses on the notional currency hedge by making daily adjustments to the “CDR Ratio”

That last phrase is the one to hold on to. The adjustment is made to the ratio, which is to say to the number of shares each receipt represents. And the direction of the adjustment is stated just as plainly:

For underlying shares that are listed in the U.S., if the Canadian dollar increases in value compared to U.S. dollars, then there is a notional hedging gain and the CDR Ratio will increase (the number of Shares in the Underlying Share Pool increases). Conversely, if the Canadian dollar decreases in value compared to U.S. dollars, then there is a notional hedging loss and the CDR Ratio will decrease (the number of Shares in the Underlying Share Pool decreases).

So CIBC does not credit your account when the hedge makes money, and does not bill you when it loses. It quietly changes how much of a Tesla share your receipt is worth. The CDR Ratio is the hedge’s ledger, published daily, in public, going back to the day each CDR listed.

Which means the ratio history is a complete record of what the hedge has done for every CDR since it launched. That record is what the rest of this guide reads.

The grey line is the ratio a costless, perfect hedge would have produced: the path that holds CDR Ratio multiplied by the exchange rate exactly level, so that a Canadian holder ends up with the underlying’s US-dollar return and nothing else. The red line is what CIBC actually published. The two start together and move together, which is the hedge doing its job, and the red line slides below the grey one, which is what the job costs. Over the Tesla CDR’s five years the published ratio finished 11.4% below the costless path.

That shortfall is the subject of the rest of this guide. What follows measures it for every CDR, not just this one, and then takes it apart.

How a CDR is priced

Once the ratio is understood, the price follows from a formula you can check yourself in ten seconds:

CDR price in Canadian dollars = underlying share price in US dollars x CDR Ratio x the USD/CAD exchange rate.

Tested against the CDRs’ own closing prices on the TSX, that formula is essentially exact:

CDR	Sessions tested	Median error	Most recent session
Tesla CDR (CAD Hedged)	482	0.079%	TSLA $375.30 USD x 0.06172924 x 1.4021 = $32.4824; closed at $32.47
Apple CDR (CAD Hedged)	482	0.083%	AAPL $338.98 USD x 0.10039311 x 1.4021 = $47.7152; closed at $47.71
Coca-Cola CDR (CAD Hedged)	406	0.152%	KO $87.12 USD x 0.24837373 x 1.4021 = $30.3391; closed at $30.42

Underlying and CDR closes from Yahoo Finance, CDR Ratios from CIBC’s published history, USD/CAD from the Bank of Canada. All captured September 22, 2026. The size of the residual is consistent with the rate used here being a daily average rather than a 4pm snapshot, which is the one input of the three not struck at the close.

Two things follow, and both are useful.

First, you can tell whether a CDR is trading at a fair price. Look up the US close, the ratio on CIBC’s directory and the day’s exchange rate, multiply, and compare. If the CDR is trading more than a few tenths of a percent away from that number, you are paying the spread rather than the price. For anyone who has not yet taken a quote apart line by line, our guide to reading a stock quote covers the bid, the ask and what sits between them.

Second, and this is the whole argument of this guide: if the hedge were perfect and free, the ratio and the exchange rate would move in exact opposite proportion, and ratio multiplied by exchange rate would be a constant. Your Canadian-dollar return would then be the underlying’s US-dollar return, full stop, which is precisely what a currency hedge promises.

So every drift in ratio x exchange rate away from constant is what the hedge cost you. Nothing else moves it.

The hedge on a day it mattered

Before the cost, the benefit, because the hedge does work and it is worth seeing it work.

On April 3, 2025, the Canadian dollar had one of its sharpest single-day moves of the period. Here is what happened to a Tesla CDR holder, and what happened the following day when the move partly reversed:

Date	USD/CAD	Move	Tesla CDR Ratio	Move
April 2 to April 3, 2025	1.4320 to 1.4069	-1.75%	0.06292468 to 0.06407083	+1.82%
April 3 to April 4, 2025	1.4069 to 1.4216	+1.04%	0.06407083 to 0.06318219	-1.39%

On April 3, an unhedged Canadian holding US shares lost 1.75% of their Canadian value purely on currency, before the stock did anything. The CDR holder’s ratio rose 1.82%, handing them a slightly larger slice of Tesla and cancelling the move out. The next day it ran the other way, and the ratio fell.

That is the product doing its job, in both directions, which is the correct way to think about a hedge. It is not protection. It is the removal of an exposure, and removing an exposure means giving up the good version of it as well as the bad.

What the hedge actually costs

CIBC discloses a fee, and the disclosure is honest as far as it goes:

While CDRs do not have any ongoing management fees, CIBC earns revenue for providing the notional currency hedge. The FX forward rate used for the notional currency hedge will on average include a spread of up to 0.60% per year.

CIBC also warns, in the same FAQ, that the tracking difference “may be greater than the per annum spread that CIBC earns for managing the notional currency hedge”, and names the reasons: fees, currency and equity volatility, the gap between short-term interest rates in Canada and the other country, and the frequency and timing of rebalancing.

That warning is doing a lot of work. Here is how much.

Taking every US CDR that existed across the same two-year window, and measuring the drift in ratio multiplied by the exchange rate:

Not one of the 64 was free. The cheapest, the Nike CDR, cost 2.11% a year. The dearest, the Supermicro CDR, cost 2.85%.

Widening it to every US CDR with enough history, measured over each one’s own full life rather than a common window, gives 90 series, a median of 2.12% a year, and a range of 1.44% to 3.08%. The direction does not change between the two measurements. Every CDR whose record is long enough to measure cost its holders something, on the common two-year window and on its own full history alike.

On the two-year panel that is three and a half to nearly five times the disclosed spread. It is worth being precise about what that means, because the obvious conclusion is the wrong one.

Where the cost comes from, and why it is not a hidden fee

Almost all of the gap between 0.60% and roughly 2.1% is not a charge anyone levies. It is the price of the hedge itself, and it is set by the bond market, not by CIBC.

Hedging US dollars back into Canadian dollars means selling US dollars forward. The price of a currency forward is set by the gap between the two countries’ short-term interest rates. When US rates sit above Canadian rates, the forward price of the US dollar sits below the spot price, and the party selling US dollars forward gives up that difference. Every year. Whoever they are.

That gap is public on both sides, and it is large:

Measure	Reading	Source and date
US 13-week treasury bill, coupon-equivalent yield	4.12%	US Treasury daily bill rates, September 21, 2026
Canada 3-month treasury bill, auction average yield	2.31%	Bank of Canada, September 8, 2026
Gap, today	1.81 percentage points
Gap, average over the measurement window	1.441 percentage points	498 daily observations, September 2024 to September 2026

Now put the two together. Fitting the measured cost of all 64 CDRs against the volatility of their underlying shares gives a base cost that every CDR pays regardless of what its stock does. That base is what the rate gap and the disclosed spread should explain, and it does, almost exactly:

Component	Annual cost
Average Canada versus US short-rate gap over the window	1.441%
CIBC’s disclosed FX spread, up to	0.600%
Predicted base cost	2.041%
Measured base cost, from the data	2.073%

Three hundredths of a percentage point apart. The arithmetic closes.

This matters for two reasons.

The first is fairness. CIBC is not skimming 2% a year. It discloses 0.60%, and the measurement is consistent with it earning roughly that. The rest is a market price, and it would be there if CIBC charged nothing at all.

The second is that the mechanism is not specific to CDRs. The rate gap is a property of hedging a currency whose home interest rates are lower than yours, not a property of this product. Anything that converts US dollar exposure back into Canadian dollars does it by selling US dollars forward, and the forward price is set the same way for a fund as it is for CIBC. This guide has not measured a hedged exchange-traded fund, because a fund does not publish a daily hedge ledger the way a CDR does, so take that as the mechanism rather than a second measurement. What the measurement does show is that the cost appears on no fee schedule anywhere, because nobody is charging it. If you hold hedged versions of US exposure in a portfolio, our Canadian ETF guide is where the hedged and unhedged versions of the same index sit side by side.

It also means the cost is not fixed forever. It is roughly whatever the Bank of Canada and the Federal Reserve are doing to each other, and that moves. Within this two-year window alone the treasury bill gap ranged from 0.60 to 1.81 percentage points, and at 1.81 today it sits at the top of that range. Behind it is a policy backdrop that has not moved in a year: the Bank of Canada’s target for the overnight rate has held at 2.25% since October 2025 while US short rates stayed above 4%. So this is an expensive moment to be holding a hedge, rather than a permanent condition of holding one.

Why some CDRs cost more than others

The base cost explains most of it. The rest is a genuinely interesting effect, and it is the reason a Tesla CDR costs more than a Coca-Cola CDR even though CIBC discloses the same spread ceiling for both.

What the data establishes is the relationship rather than its cause: the correlation between an underlying’s volatility and its CDR’s hedge cost is +0.78 across the 64 names. The explanation CIBC itself offers fits it, and is the natural one. A currency hedge has to be sized to the position it is hedging, and CIBC rebalances daily, so the hedge is always sized to where the position stood at the last rebalance. A share that barely moves between rebalances leaves the hedge about right. A share that jumps leaves it covering the wrong amount of money, and the error is closed at whatever the exchange rate has become by then. CIBC’s FAQ names “currency and equity volatility” and “the frequency and timing of rebalancing the notional currency hedge” among the reasons a CDR’s return falls short of the underlying’s.

Whatever the precise channel, the pattern across the measured names is consistent:

CDR	Volatility of the underlying	Measured hedge cost
Coca-Cola CDR (CAD Hedged)	17.9%	2.22% a year
Procter & Gamble CDR (CAD Hedged)	19.1%	2.17% a year
Tesla CDR (CAD Hedged)	59.4%	2.73% a year
Micron CDR (CAD Hedged)	71.8%	2.65% a year
Supermicro CDR (CAD Hedged)	103.4%	2.85% a year

Across all 64, the least volatile quartile averaged 22.6% volatility and cost 2.24% a year; the most volatile quartile averaged 54.2% volatility and cost 2.47%. Every 10 points of annualised volatility adds roughly 0.08% a year to the cost of the hedge.

The practical read: the CDRs whose price action makes them most tempting are the ones where the hedge has cost the most. Shopping between issuers will not change it, because there is only one issuer. It is the price of hedging a target that keeps moving.

Tesla two ways, with real numbers

Abstractions about basis points do not settle anything. Here is the same two years, the same stock, two ways of owning it, in Canadian dollars. Tesla pays no dividend, so the price return is the total return and nothing is hidden.

	September 23, 2024	September 21, 2026	Change
Tesla, in US dollars	$250.00	$375.30	+50.1%
USD/CAD	1.3510	1.4021	+3.8%
The Tesla CDR, in Canadian dollars			+42.1%
Tesla shares held unhedged, in Canadian dollars			+55.8%

The CDR holder and the direct holder owned the same company, over the same two years, and ended 13.7 percentage points of return apart. Two separate effects produce that gap, each a rate applied to the same 50.1% position, and it is important to keep them separate:

– The currency move, worth 3.8%. The Canadian dollar fell against the US dollar. The direct holder collected that; the CDR holder gave it up. This is the hedge working, and it would have run the other way in a period when the loonie rose. – The hedge cost, worth 5.37% over the window, or 2.73% a year. This is not the hedge working. It is what the hedge charged, and it runs in the same direction whatever the currency does.

That second number is the one to carry away. You can have a reasonable view that currency risk is not worth carrying. What you cannot do is treat the hedged version as the free, simple, Canadian-friendly default, because the 2.73% a year is charged whether the loonie rises, falls or does nothing at all.

For the company-specific side of this decision, including how the CDR fits alongside the Nasdaq shares and which account suits the position, our Tesla stock page covers the route comparison for that name in detail.

When a ratio change is not a hedge move

If you go and read a ratio history yourself, you will hit something that looks alarming: the ratio occasionally changes by a factor of five, ten or twenty overnight. Those are not hedging catastrophes. They are corporate actions, and they come in two kinds.

Share splits at the underlying company. CIBC absorbs these by adjusting the ratio. Tesla’s three-for-one split in August 2022 tripled the Tesla CDR Ratio on the same day. Nvidia’s ten-for-one split in June 2024 did the same thing to the Nvidia CDR.

CIBC re-ratioing the CDR itself. This one is less known. If a CDR’s price drifts far from that opening range, CIBC resets it. A month after Nvidia’s split multiplied the ratio by ten, CIBC cut it by four to bring the CDR price back down. In November 2025 it did the same to a batch at once, cutting the Palantir and Uber CDR Ratios to about a quarter of their previous values.

Date	CDR	Ratio before	Ratio after	Factor
November 14, 2025	Palantir	0.220356	0.055007	x0.2496
December 17, 2025	ServiceNow	0.018859	0.094063	x4.9877
March 10, 2026	Micron	0.163719	0.032764	x0.2001
April 2, 2026	Booking Holdings	0.004717	0.117591	x24.9297
June 26, 2026	Honeywell	0.079791	0.039899	x0.5000
September 2, 2026	Amphenol	0.106894	0.214584	x2.0074

None of these changes what your holding is worth on the day. A ratio cut to a quarter comes with a CDR price cut to a quarter, or with four times as many CDRs, exactly as a share split does.

They are easy to tell apart from hedge moves, and the separation is clean rather than a judgement call. Across all 115 US CDRs, the largest single-day ratio move caused by hedging was 2.17%. The smallest corporate action was a factor of two. There is nothing in between, which is why the cost measurement in this guide can exclude corporate actions without any risk of cutting real hedge days along with them.

Tax, accounts and the paperwork

CDRs are qualified investments for registered plans. CIBC’s FAQ lists RRSPs, RRIFs, RDSPs, RESPs, DPSPs, FHSAs and TFSAs. Which account you choose still changes your outcome more than the route does, for one specific reason.

Question	Answer
Can I hold CDRs in a TFSA or RRSP?	Yes. CIBC lists RRSPs, RRIFs, RDSPs, RESPs, DPSPs, FHSAs and TFSAs as eligible.
Do I get the dividends?	Yes, passed through less applicable withholding tax, converted to Canadian dollars on the day the custodian receives them.
Is US withholding tax different from holding the share directly?	No. CIBC states a holder is subject to US withholding “to the same extent that the investor would have been subject to U.S. withholding taxes had the investor held the underlying shares directly”. An RRSP should generally receive US dividends free of withholding; a TFSA should not.
Do CDRs count for T1135 foreign property reporting?	In a non-registered account, yes.
Can Americans in Canada own them?	No.
Do I get to vote?	Not directly. Instructions go through CIBC’s corporate actions page.

The withholding point is the one that costs real money and it has nothing to do with CDRs specifically. Article X(2)(b) of the Canada-US tax treaty caps US withholding on dividends at “15 per cent of the gross amount of the dividends in all other cases”, and Article XXI exempts Canadian retirement plans from it. A TFSA is not a retirement plan in the treaty’s terms, so a US dividend paid into one loses that 15% at the border and there is nothing to claim it back against, because there is no Canadian tax on that income to credit it against. Our guide to how investment income is taxed in Canada works that arithmetic through with the treaty articles, and which account to fill first covers the ordering question it raises.

On the foreign property form, the statute rather than the FAQ is the better authority, and it confirms CIBC’s answer. Income Tax Act s.233.3(1) defines “specified foreign property” to include, at paragraph (h), a right under a contract to property that is itself specified foreign property, and at paragraph (c), a share of a non-resident corporation. A CDR is a right to the second, so it is caught by the first. Once the total cost of all your specified foreign property passes $100,000 Canadian, the T1135 is due.

The carve-out is worth knowing because it is where most write-ups stop short. That same section defines the entities who have to report, and it excludes a trust described in paragraphs (a) to (e.1) of the definition of “trust” in s.108(1). Paragraph (a) of that definition lists TFSAs, RRSPs, RRIFs, RESPs, RDSPs and FHSAs by name. CDRs held inside a registered plan do not count toward the $100,000 and do not have to be reported. Only the ones in a non-registered account do. Our piece on the $100,000 foreign property threshold goes through what the form asks for once you are over it.

One last piece of paperwork, and it is the one people forget. A CDR trades in Canadian dollars, so its adjusted cost base is already in Canadian dollars and you never have to convert anything. Direct US shares are the opposite: every purchase and every sale has to be translated at the rate on the day, and a position that lost money in US dollars can produce a taxable gain in Canadian ones. That is a real and expensive surprise, covered in US stocks and the exchange rate, and the mechanics of the pool itself are in our guide to adjusted cost base. If you want to keep the running total, the adjusted cost base calculator does the bookkeeping. Simpler record-keeping is a genuine, underrated point in the CDR’s favour, and it belongs in the decision alongside the cost.

The mistake people actually make

The mistake is treating “CAD Hedged” as a convenience feature rather than a position.

It reads like a formatting choice, the way a price tag in your own currency reads like a formatting choice. It is not. It is an active decision to have no currency exposure, taken on your behalf, every day, for a price.

What it costs, concretely. Take a $20,000 position, hold it five years, and assume the share price ends where it started so nothing else clouds the picture. At the median measured rate of 2.12% a year the hedge gives up $2,030 of it. At the Tesla CDR’s 2.73%, $2,588. That is before considering which way the currency went, which is a separate question with a separate answer.

Against that, what it saves is real but bounded. A currency conversion on a Canadian platform runs about 1.5% each way on small amounts, so a round trip is 2.98% of the amount converted, paid once. The conversion is charged once and the hedge is charged every year, so the two cross. At the median 2.12% they cross at 1.41 years; at Tesla’s 2.73%, at 1.09 years. Before the crossover the CDR wins comfortably. After it, the hedge is the bigger number and keeps growing. Our guide to trading fees in Canada prices the conversion side from each broker’s published schedule, including the cheaper routes available on larger amounts.

So the honest framing is not “which is cheaper”. It is:

– Short holding period, small amount, want it simple: the CDR is a good answer. You pay a couple of percent a year and you skip the conversion, the US dollar balance and the currency bookkeeping. – Long holding period, meaningful amount: the arithmetic turns. A five or ten year holding pays the hedge cost five or ten times over, and the one-time conversion stops being the expensive part. – You actually want the US dollar exposure: then the hedge is not a cost you are paying for a service, it is a cost you are paying to remove something you wanted. If part of your reason for owning US assets is to hold something outside the Canadian dollar, a hedged holding does not do that job.

How to decide, in four questions

1. How long will I hold it? Under two years, the hedge cost is probably smaller than the conversion cost. Over five, it is probably several times larger. 2. Do I want currency exposure or not? This is the actual question and it has no default answer. If you want your savings diversified out of the Canadian dollar, a CAD-hedged holding will not do it. 3. How volatile is the underlying? The hedge on a steady consumer staple costs about 2.2% a year. The hedge on a high-volatility name costs closer to 2.8%. 4. Which account? US dividends are withheld at 15% in a TFSA and generally not in an RRSP, either route. That gap is usually larger than the difference between the two routes.

If the answer to the first two is “a long time” and “yes, I want it”, the direct shares are the better fit and the work is opening the right kind of account. Our guide to opening a brokerage account in Canada covers what a US dollar account is and when it is worth having one.

What this guide is and is not

Everything above is measurement, not advice. The numbers are computed from CIBC’s own published CDR Ratio histories, the Bank of Canada’s published exchange rates and treasury bill yields, and the US Treasury’s published bill rates, all captured on September 22, 2026. Rate gaps move, and so will the cost of every hedge in this guide. The direction of the argument holds whatever the gap does: a hedge is a position, it has a price, and the price is knowable in advance from public data.

Nothing here is a recommendation to buy or sell any security, and nothing here is tax advice. The T1135 and withholding points are the general rules as the statute and the treaty set them out; individual circumstances, and in particular anything involving US citizenship or residency, need professional advice.

Where to go next

Three decisions sit just outside this guide, and each of them is worth taking up separately. The first is currency conversion itself, because if you decide against the hedge you now have to move money across the border efficiently, and the published rates differ by more than most people expect. Our trading fees guide, linked above, prices every route from the brokers’ own schedules.

The second is the broader one. The hedged-versus-unhedged choice shows up again the moment you look at index funds, where most major US indices are sold to Canadians in both forms and the rate gap measured here applies to them identically. It is the same trade in a different wrapper, and the amount at stake is usually larger, because an index holding tends to be the biggest thing a person owns.

The third is the account question, which decides more of your outcome than the route does. A US dividend keeps 15% more of itself in an RRSP than in a TFSA, and that gap is wider than the difference between a CDR and a direct share. Our dividend income calculator shows what a given yield actually pays once withholding comes out of it.