Wednesday, December 29, 2010

ADR

An ADR (American Depository Receipt) is a receipt for the stock of a non-US company that is held in by a bank custodian or trustee. Essentially an ADR is a short-cut for a foreign company to gain a listing on the US stock markets. In practice ADRs are listed on many exchanges around the world, but may be called International Depository Receipts, or Global Depositary Receipts or other terms. The term ADR arises because that was where the practice first developed. Holders of ADRs are entitled to receive a proportionate share of dividends and capital gains - just like a normal share. The key benefit of a depository receipt is being able to buy shares in a foreign company without having to connect to and deal on a an overseas stock exchange (though these days many online discount brokers offer multi-market access).

Synonyms: American Depository Receipt, Depository Receipt, International Depository Receipt

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