A global depository receipt (GDR and sometimes spelled ''depositary'') is a general name for a
depositary receipt
A depositary receipt (DR) is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange. Depositary receipts facilitates buying shares in ...
where a certificate issued by a
depository bank
A depository bank ( U.S. usage) or depositary bank (predominantly EU usage) is a specialist financial entity which, depending on jurisdiction, facilitates investment in securities markets.
Depository banks in the United States
In the United ...
, which purchases
shares of foreign companies, creates a
security" \n\n\nsecurity.txt is a proposed standard for websites' security information that is meant to allow security researchers to easily report security vulnerabilities. The standard prescribes a text file called \"security.txt\" in the well known locat ...
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 ...
of a foreign company and are commonly used to invest in companies from developing or
emerging markets
An emerging market (or an emerging country or an emerging economy) is a market that has some characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or wer ...
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 savers ...
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, t ...
,
Citigroup
Citigroup Inc. or Citi ( stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomera ...
,
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 St ...
, and
The Bank of New York Mellon
The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American investment banking services holding company headquartered in New York City. BNY Mellon was formed from the merger of The Bank of New York and the Mellon Finan ...
. 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
Loca ...
,
Luxembourg Stock Exchange
The Luxembourg Stock Exchange, LuxSE (french: Bourse de Luxembourg) is based in Luxembourg City at 35A boulevard Joseph II.
The chairman of the board is Alain Kinsch and the chief executive officer is Julie Becker.
The exchange has pre-opening ...
, 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 Pau ...
, 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 t ...
# 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
A depositary receipt (DR) is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange. Depositary receipts facilitates buying shares in ...
*
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 Indian Depository Receipt (IDR) is a financial instrument denominated in Indian Rupees in the form of a depository receipt. The IDR is a specific Indian version of the similar global depository receipts.
It is created by a Domestic Depository (c ...
*
Cross listing
References
External links
Deutsche Bank's depositary receipt websiteBNY Mellon ADRsFrankfurt Stock Exchange
Depositary receipts
Banking
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