American depositary receipt: Difference between revisions

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{{fwmd|ADR}}''Not to be confused with [[synthetic equity]] derivatives.''
{{a|glossary|{{ADR - FWMD}}}}''Not to be confused with [[synthetic equity]] derivatives.''


An [[American depositary receipt]], or “[[ADR]]”, is a way of getting [[Synthetic trade|synthetic]] exposure to securities in hard-to-access markets.  
An [[American depositary receipt]], or “[[ADR]]”, is a way of getting [[Synthetic trade|synthetic]] exposure to securities in hard-to-access markets.  

Revision as of 15:21, 1 November 2019

The Jolly Contrarian’s Glossary
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ADR

It’s not synthetic equity. Just calm the hell down.

Docs The Full American: US bond docs, plus security and custody. Lots of it, all dull. 6
Amendability Nope, but why would you? 5
Collateral Fully, and delta-one. 0
Transferability Seeing as that’s the point, yes. Safely transferable. 0
Leverage Zippo the Hippo. 0
Fright-o-meter Disney grade only. Suitable for all the family — Unless the issuer is in a scary foreign jurisdiction in which case OMEN GRADE 8

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Not to be confused with synthetic equity derivatives.

An American depositary receipt, or “ADR”, is a way of getting synthetic exposure to securities in hard-to-access markets.

ADRs are issued by a US custodian bank evidencing an entitlement to the stock purchased by the bank which the bank has bought through a broker in the open local market in the local currency are deposited in a foreign depositary bank. ADR holders realise any dividends and capital gains in U.S. dollars converted from their local currency net of conversion expenses and foreign taxes. They can be listed or unlisted.

They were introduced in 1927[1] as an easier way for U.S. investors to buy foreign stock. Before ADRs came along, US persons wanting to buy non-U.S. listed shares had to buy the shares on international exchanges in the local currency, with all the FX and regulatory hair that entails.

See also

References

  1. Fun fact: The first ADR was introduced by J.P. Morgan on Selfridges.