What is a Depository Receipt?
Depository receipts are derivative securities that are issued by an international buyer or borrower by utilizing the services of a domestic trustee. The security is issued through the auspices of a depository bank, which in turn purchases shares of international companies on behalf of the account owner. There are two commonly employed forms of the depository receipt: the Global Depository Receipt and the American Depository Receipt. Known as a GDR, the Global Depository Receipt is essentially a certificate issued by the depository bank. The certificate entitles the purchase of shares of stock issued by international companies that are not headquartered in the same country as the borrower. This approach makes it possible to invest in a wide range of companies, especially in emerging markets. GDRs are usually traded on the London Stock Exchange, with a single GDR usually representing in the range of ten shares of stock. American Depository Receipts or ADRs function in a similar manner, i
