ADR Stocks
American Depositary Receipt Stocks Glossary Definition
American Depositary Receipt. American certificates of deposit issued by a US depositary bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share, or a bundle of shares in a foreign corporation.
ADRs facilitate the financing of foreign companies in the US. As foreign shares are deposited abroad, the equivalent ADRs are issued to buyers in the US. When transactions are made, the ADRs change hands, not the foreign stock certificates. This eliminates the actual shipment of stock certificates between the US and foreign countries and expedites arbitrage transactions in securities traded on foreign exchanges.
If the ADRs are sponsored, the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADRs. Unsponsored ADRs do not receive such assistance.
ADRs carry the same currency, political and economic risks as the underlying foreign shares. The prices of the two are kept essentially identical by arbitrage.
American depositary shares (ADSs) are a similar form of certification.
Related to ADR Depositary:
- Geographical Hedge Fund Guides
- Hedge Fund Employment Guide
- Financial Certification
- Hedge Fund Forum
- Prime Brokers
- Hedge Fund Software
- Investment Book
- Hedge Fund Terms and Definitions
- Commercial Real Estate Brokers
- Hedge Fund Database
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