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An American depositary receipt (abbreviated ADR, and sometimes spelled depository) is a negotiable security that represents securities of a foreign company and allows that company's shares to trade in the U.S. financial markets.[1]
Shares of many non-U.S. companies trade on U.S. stock exchanges through ADRs, which are denominated and pay dividends in U.S. dollars, and may be traded like regular shares of stock.[2] ADRs are also traded during U.S. trading hours, through U.S. broker-dealers. ADRs simplify investing in foreign securities because the depositary bank "manage[s] all custody, currency and local taxes issues".[3]
The first ADR was introduced by J.P. Morgan in 1927 for the British retailer Selfridges on the New York Curb Exchange, the American Stock Exchange's precursor.[4]
They are the U.S. equivalent of a global depository receipt (GDR). Securities of a foreign company that are represented by an ADR are called American depositary shares (ADSs).
- ^ Staff, Investopedia (18 November 2003). "American Depositary Receipt - ADR". Retrieved 17 June 2017.
- ^ Sikonathi Mantshantsha (22 March 2013). "American Depositary Receipts: Foreign investment made easy". Financial Mail.
- ^ "How an ADR Works and the Value for Companies & Investors". OTC Markets Group. Retrieved 18 March 2015.
- ^ "JPMorgan Celebrates 80th Anniversary of the ADR". JPMorgan Chase & Co. April 27, 2007. Archived from the original on April 2, 2015. Retrieved March 18, 2015.