GDR

GDR

See Global Depositary Receipt.

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Global Depository Receipt

A certificate issued by a bank representing one or more shares of a stock the bank holds in trust but that is traded on a foreign stock exchange. The GDR is denominated in the local currency, and entitles the bearer to any dividends and other benefits associated with the shares. GDRs can be traded like any other security. Using GDRs shields the investor from foreign exchange risk and any applicable tariffs he/she would have had to pay if he/she had bought the stock outright. It also exempts the investor from any requirements the foreign exchange might have levied. It is more commonly known as an international depository receipt (IDR). See also: American Depository Receipt.

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Global depositary receipt (GDR). To raise money in more than one market, some corporations use global depositary receipts (GDRs) to sell their stock on markets in countries other than the one where they have their headquarters.

The GDRs are issued in the currency of the country where the stock is trading. For example, a Mexican company might offer GDRs priced in pounds in London and in yen in Tokyo.

Individual investors in the countries where the GDRs are issued buy them to diversify into international markets. GDRs let you do this without having to deal with currency conversion and other complications of overseas investing.

However, since GDRs are frequently offered by newer or less-known companies, the prices are often volatile and the stocks may be thinly traded. That makes buying GDRs riskier than buying domestic stocks.

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Global Depositary Receipt (GDR)

What Does Global Depositary Receipt (GDR) Mean?

(1) A bank certificate representing shares in a foreign country and issued in more than one country. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares but are offered for sale globally through the various bank branches.

(2) A financial instrument used by private markets to raise capital denominated in either U.S. dollars or foreign currencies.

Investopedia explains Global Depositary Receipt (GDR)

(1) A GDR is very similar to an American Depositary Receipt.

(2) These instruments are called EDRs when private markets are attempting to obtain euros.

Related Terms:
• American Depositary Receipt—ADR
• American Stock Exchange—AMEX
• Common Stock
• Exchange-Traded Fund
• Mutual Fund