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You’ll hardly recognize the version of Amazon.com Inc. shares that trade on Canada’s NEO Exchange.

Only about 30,863 shares changed hands one day earlier this week, and the bid-ask spread late in the day was four cents. On the Nasdaq, home exchange to Amazon (AMZN-Q), volume totalled 1.8 million shares and the bid-ask spread was just one US cent. Which exchange should you use to buy Amazon for your portfolio? There are two good arguments for the NEO-listed version.

Amazon is one of 10 U.S.-listed stocks you can now buy in a currency-hedged version on the NEO exchange as a Canadian Depositary Receipt, or CDR. The availability of CDRs has some investors wondering whether they’re a better choice than the U.S.-listed versions of the same stocks. “I would like to buy Amazon for my RRSP,” a reader wrote recently. “Is it better to buy the stock or the new Canadian depositary receipts?”

Here are two good reasons to consider AMZN-NEO over AMZN-Q:

One, you’ll very likely save money on foreign exchange costs. Changing Canadian dollars into U.S. currency and vice versa is a profit centre for brokers. With CDRs, you get an institutional exchange rate that will cost less.

There’s a low-cost strategy for exchanging money between Canadian and U.S. dollars called Norbert’s Gambit. If you wanted to buy U.S. currency, you’d purchase an interlisted stock in Canadian dollars and then sell it in U.S. dollars. Buying CDRs is a clean, quick, simple alternative to cutting the forex costs involved when Canadians buy U.S. stocks.

The other advantage of CDRs is their accessibility to small investors. AMZN-NEO closed at $20.39 on Tuesday, while AMZN-Q closed at the equivalent of about $4,040 in Canadian dollars.

It’s far easier to fit a stock that trades around $20 a share into a small portfolio than one costing more than $4,000. In a $50,000 portfolio, one AMZN-Q share would have a fairly aggressive weighting of 8 per cent, double what you’d get with a nice, round board lot of 100 AMZN-NEO shares.

The higher bid-ask spread for AMZN-NEO – that’s the difference between what investors are willing to pay as buyers and willing to accept as sellers – will be a turnoff to some investors. But this is an issue that may go away with time. The more investors turn to CDRs, the tighter the spreads will get.

Further reading on CDRs, including information on taxation.

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