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What is an ADR?

April 26, 2017adr

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What is an ADR?

2 Answers

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An American Depositary Receipt (ADR) is a negotiable instrument that represents ownership in securities of a non-US company; it is a mechanism that facilitates US trading of non-US securities. ADRs are created when a broker purchases the non-US company’s shares on the home stock market and delivers these shares to the Depositary. The Depositary bank then issues ADRs on the back of these underlying shares that are held in custody. In addition, Depositary Receipts may also be purchased in the US secondary trading market.

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An “ADR” is an American Depositary Receipt issued by banks and represents securities of a non-U.S. company. ADRs allow trading of non-U.S. securities in the U.S.