A depositary receipt (DR) is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities . The depositary receipt trades on a local stock exchange . Depositary receipts facilitates buying shares in foreign companies, because the shares do not have to leave the home country.
6-457: A global depository receipt ( GDR and sometimes spelled deposit a ry ) is a general name for a depositary receipt where a certificate issued by a depository bank , which purchases shares of foreign companies, creates a security on a local exchange backed by those shares. They are the global equivalent of the original American depositary receipts (ADR) on which they are based. GDRs represent ownership of an underlying number of shares of
12-421: A company must transfer shares to a brokerage house in its home country. Upon receipt, the brokerage uses a custodian connected to the international stock exchange for selling the depositary receipts. This connection ensures that the shares of stock actually exist and no manipulation occurs between the foreign company and the international brokerage house. A typical ADR goes through the following steps before it
18-403: A foreign company and are commonly used to invest in companies from developing or emerging markets by investors in developed markets. Prices of global depositary receipt are based on the values of related shares, but they are traded and settled independently of the underlying share. Typically, 1 GDR is equal to 10 underlying shares, but any ratio can be used. It is a negotiable instrument which
24-513: Is a stub . You can help Misplaced Pages by expanding it . Depositary receipt Depositary receipts that are listed and traded in the United States are American depositary receipts (ADRs). European banks issue European depositary receipts (EDRs), and other banks issue global depository receipts (GDRs). A depositary receipt typically requires a company to meet a stock exchange’s specific rules before listing its stock for sale. For example,
30-562: Is denominated in some freely convertible currency. GDRs enable a company, the issuer, to access investors in capital markets outside of its home country. Several international banks issue GDRs, such as JPMorgan Chase , Citigroup , Deutsche Bank , and The Bank of New York Mellon . GDRs are often listed in the Frankfurt Stock Exchange , Luxembourg Stock Exchange , and the London Stock Exchange , where they are traded on
36-601: The International Order Book (IOB). If for example an Indian company which has issued ADRs in the American market wishes to further extend it to other developed and advanced countries such as in Europe, then they can sell these ADRs to the public of Europe and the same would be named as GDR. GDR can be issued in more than one country and can be denominated in any freely convertible currency. This finance-related article
#152847