What is an ADR (as in stock market)?
- KikerLv 51 decade agoBest Answer
This is an American Depository Receipt.
There are different levels of ADRs, but essentially they are receipts held by a bank (the depository) wherein a foreign company can list their stocks on any of the US exchanges.
Now, depending on the level of ADR the company has depends on how much information you will receive as an Investor.
A Level 1 ADR means that either the company wants to list or not, it doesn't matter. The bank would simply buy stocks in the native market of the Company and then sell them in the US under the Level 1 ADR. The company is not required to register any financial documents with the SEC or anything. You are completely blind as an investor to this stocks fundamentals.
A Level 3 means the company actively wants to list, but is going through a Bank in order to do so. This means an entire new issuance of stocks are sold exclusively on the US Exchange of choice and comes complete with an SEC registration and all the financials. Level 3s are costly and time consuming but are truly far better for the Investor.
You can usually tell the difference between the two if you look up the security on Yahoo! Finance. If all of the hyperlinks are greyed out for the fundamental metrics, than it is a Level 1.
Hope this helps.
- 4 years ago
An ADR is a American Depository Receipt. Its represents a share of a foreign company denominated in US currency.
- 1 decade ago
Receipt for the shares of a foreign-based stock that are held by a US bank and entitle shareholders to all dividends and capital gains. It's a way for Americans to buy shares in foreign-based companies on a US stock exchange.