A global depository receipt (GDR and sometimes spelled ''depositary'') is a general name for a
depositary receipt where a certificate issued by a
depository bank, which purchases
shares of foreign companies, creates a
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on a local
exchange backed by those shares. They are the global equivalent of the original
American depositary receipt
An American depositary receipt (ADR, and sometimes spelled ''depository'') is a negotiable security that represents securities of a foreign company and allows that company's shares to trade in the U.S. financial markets.
Shares of many non-U.S ...
s (ADR) on which they are based. GDRs represent ownership of an underlying number of
shares
In financial markets, a share is a unit of equity ownership in the capital stock of a corporation, and can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an ...
of a foreign company and are commonly used to invest in companies from developing or
emerging markets by investors in developed markets.
Prices of global depositary receipt are based on the values of related shares, but they are traded and settled independently of the underlying share. Typically, 1 GDR is equal to 10 underlying shares, but any ratio can be used. It is a
negotiable instrument
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...
which is denominated in some freely convertible currency.
GDRs enable a company, the issuer, to access investors in
capital market
A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of saver ...
s outside of its home country.
Several international banks issue GDRs, such as
JPMorgan Chase
JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, the w ...
,
Citigroup
Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
,
Deutsche Bank
Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...
, and
The Bank of New York Mellon. GDRs are often listed in the
Frankfurt Stock Exchange
The Frankfurt Stock Exchange (german: link=no, Börse Frankfurt, former German name – FWB) is the world's 12th largest stock exchange by market capitalization. It has operations from 8:00 am to 10:00 pm (German time).
Organisation
Locate ...
,
Luxembourg Stock Exchange, and the
London Stock Exchange
London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St Pa ...
, where they are traded on the International Order Book (IOB).
Characteristics
# It is an unsecured security
# It may be converted into number of shares
# Interest and redemption price is public in foreign agency
# It is listed and traded on the
stock exchange
A stock exchange, securities exchange, or bourse is an exchange where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds and other financial instruments. Stock exchanges may also provide facilities for th ...
# Holders of a GDR do not carry any voting rights
Usage
If for example an Indian company which has issued ADRs in the American market wishes to further extend it to other developed and advanced countries such as in Europe, then they can sell these ADRs to the public of Europe and the same would be named as GDR.
GDR can be issued in more than one country and can be denominated in any freely convertible currency.
See also
*
Depositary receipt
*
American Depositary Receipt
An American depositary receipt (ADR, and sometimes spelled ''depository'') is a negotiable security that represents securities of a foreign company and allows that company's shares to trade in the U.S. financial markets.
Shares of many non-U.S ...
*
European depositary receipt
*
Luxembourg Depositary Receipt
*
Indian Depository Receipt
*
Cross listing
References
External links
Deutsche Bank's depositary receipt websiteBNY Mellon ADRsFrankfurt Stock Exchange
Depositary receipts
Banking
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