ADR - American Depository Receipt Definition

ADR - American Depository Receipt Definition

        ADRs trade on major global exchanges such as the LSE and NYSE. They are issued by a US depository bank and can be a fraction of a share, a single share, or multiple shares of a foreign stock.ADRs permit investors to buy foreign shares locally without the need to change currency or access a foreign exchange. 

        In addition, US ADRs pay dividends in US dollars, and can be traded like any other shares on the exchange. The price of an ADR reflects the price of the stock in its country, adjusted for the ratio of ADRs to foreign company shares.

        ADRs give local North American investors (in the case of US listed ADRs) the ability to buy companies that would otherwise be difficult, if not impossible to access. Do your research as some ADRs may not track their foreign listed equivalent stocks perfectly.