American Depositary Receipt
(redirected from Dollar-Denominated Negotiable Certificate)American Depositary Receipt (ADR)
American Depository Receipt
American Depositary Receipt (ADR)
Stocks of some, especially large, foreign companies traded in the U.S. markets are traded as American Depositary Receipts (ADRs). ADRs are receipts for the shares of a foreign corporation held by a U.S. depositary bank. The receipts are traded openly on the U.S. markets, and the owner (shareholder) is entitled to all dividends and capital gains. Each ADR represents a determined ratio of the foreign stock, and the price of the ADR corresponds to the price of the stock in the home market adjusted for this ratio.
ADRs traded in the U.S. markets will clear and settle in U.S. dollars. The depositary bank will also convert, for a small fee, any dividends to U.S. dollars.
Thomas M. Tarnowski, Senior Business Analyst, Global Investment Banking Division, Citigroup, Inc.—Salomon Smith Barney, New York, NY, and London, UKAmerican depositary receipt (ADR).
Shares of hundreds of major overseas-based companies, including names such as British Petroleum, Sony, and Toyota, are traded as ADRs on US stock markets in US dollars.
ADRs are actually receipts issued by US banks that hold actual shares of the companies' stocks. They let you diversify into international markets without having to purchase shares on overseas exchanges or through mutual funds.