Wednesday, July 7, 2010

American Depositary Receipt (ADR)

Ever wondered what an "ADR" is when they're quoted by some financial source?  "An American Depositary Receipt (ADR) represents ownership in the shares of a non-U.S. company that trades in U.S. financial markets.  ADRs enable U.S. investors to buy shares in these foreign companies without the hazards and inconveniences of cross-border and cross-currency transactions.  ADRs are priced in U.S. dollars, pay dividends in U.S. dollars, and can be traded like the shares of U.S.-based companies.  Each ADR is issued by a U.S. depositary bank, and can represent a fraction of a share, a single share, or multiple shares.  An owner of an ADR has the right to obtain the foreign stock it represents, but U.S. investors usually find it more convenient to simply own [and trade] the ADR itself.  There are currently four major commercial banks that provide depositary bank services - JPMorgan, Citibank, Deutsche Bank, and the Bank of New York Mellon."  Another nugget of information for you, in case you thought it was an Alternate Dispute Resolution.  Now you know.  Thanks, Wikipedia.