789:(OTC) market. These shares are issued in accordance with market demand, and the foreign company has no formal agreement with a depositary bank. Unsponsored ADRs are often issued by more than one depositary bank. Each depositary services only the ADRs it has issued. Since the company is not formally involved in an unsponsored issue, the motivation of the company to list overseas is irrelevant for unsponsored programs. Instead, the dynamics of this market is determined by the incentive structure of three types of players: holders of the securities on-shore, the investors in depository receipts off-shore and the intermediaries (depository banks and exchanges).
149:
760:, usually by a broker who has purchased the shares in the open market local to the foreign company. An ADR can represent a fraction of a share, a single share, or multiple shares of a foreign security. The holder of a DR has the right to obtain the underlying foreign security that the DR represents, but investors usually find it more convenient to own the DR. The price of a DR generally tracks the price of the foreign security in its home market, adjusted for the ratio of DRs to foreign company shares. In the case of companies domiciled in the
1017:
shares, there is no guarantee the shares will trade on any U.S. exchange. The holder of the foreign shares would have to find a broker who has trading authority in the foreign market where those shares trade. If the owner continues to hold the ADR past the effective date of termination, the depositary bank will continue to hold the foreign deposited securities and collect dividends, but will cease distributions to ADR owners.
36:
992:
or via purchasing the underlying domestic shares of the company on their primary exchange and then swapping them for ADRs; these swaps are called "crossbook swaps" and on many occasions account for the bulk of ADR secondary trading. This is especially true in the case of trading in ADRs of UK companies where creation of new ADRs attracts a 1.5%
748:
that represent securities of companies that are foreign to the market on which the DR trades. DRs enable domestic investors to buy securities of foreign companies without the accompanying risks or inconveniences of cross-border and cross-currency transactions. Companies may choose to issue depository
991:
One can either source new ADRs by depositing the corresponding domestic shares of the company with the depositary bank that administers the ADR program or, instead, one can obtain existing ADRs in the secondary market. The latter can be achieved either by purchasing the ADRs on a U.S. stock exchange
919:
Foreign companies that want their stock to be limited to being traded by only certain individuals may set up a restricted program. There are two SEC rules that allow this type of issuance of shares in the United States: Rule 144-A and
Regulation S. ADR programs operating under one of these two rules
882:
Setting up a Level 3 program means that the foreign company is not only taking steps to permit shares from its home market to be deposited into an ADR program and traded in the United States; it is actually issuing shares to raise capital. In accordance with this offering, the company is required to
1016:
Owners of ADRs are typically notified in writing at least thirty days prior to a termination. Once notified, an owner can surrender their ADRs and take delivery of the foreign securities represented by the
Receipt, or do nothing. If an ADR holder elects to take possession of the underlying foreign
1004:
Most ADR programs are subject to possible termination. Termination of the ADR agreement will result in cancellation of all the depositary receipts, and a subsequent delisting from all exchanges where they trade. The termination can be at the discretion of the foreign issuer or the depositary bank,
902:
Foreign companies with Level 3 programs will often issue materials that are more informative and are more accommodating to their U.S. shareholders because they rely on them for capital. Overall, foreign companies with a Level 3 program set up are the easiest on which to find information.
776:
When a company establishes an ADR program, it must decide what exactly it wants out of the program, and how much time, effort, and other resources they are willing to commit. For this reason, there are different types of programs, or facilities, that a company can choose.
831:
Level 2 depositary receipt programs are more complicated for a foreign company. When a foreign company wants to set up a Level 2 program, it must file a registration statement with the SEC and is under SEC regulation. In addition, the company is required to file a
820:. However, the company must have a security listed on one or more stock exchanges in a foreign jurisdiction and must publish in English on its website its annual report in the form required by the laws of the country of incorporation, organization, or domicile.
1020:
Usually up to one year after the effective date of the termination, the depositary bank will liquidate and allocate the proceeds to those respective clients. Many US brokerages can continue to hold foreign stock, but may lack the ability to trade it overseas.
878:
A Level 3 American
Depositary Receipt program is the highest level a foreign company can sponsor. Because of this distinction, the company is required to adhere to stricter rules that are similar to those followed by U.S. companies.
1211:
804:
A majority of
American depositary receipt programs currently trading are issued through a Level 1 program. This is the most convenient way for a foreign company to have its equity traded in the United States.
895:
annually and must adhere to U.S. GAAP standards or IFRS as published by the IASB. In addition, any material information given to shareholders in the home market, must be filed with the SEC through
823:
Companies with shares trading under a Level 1 program may decide to upgrade their program to a Level 2 or Level 3 program for better exposure in the United States markets.
817:
980:
Regulation S shares cannot be held or traded by any "U.S. person" as defined by SEC Regulation S rules. The shares are registered and issued to offshore, non-U.S. residents.
797:
Level 1 depositary receipts are the lowest level of sponsored ADRs that can be issued. When a company issues sponsored ADRs, it has one designated depositary who also acts as its
749:
receipts in another jurisdiction for a host of commercial reasons including signalling to their investors and clients about their enhanced corporate governance standard.
851:
The advantage that the company has by upgrading their program to Level 2 is that the shares can be listed on a U.S. stock exchange. These exchanges include the
1005:
but is typically at the request of the issuer. There may be a number of reasons why ADRs terminate, but in most cases the foreign issuer is undergoing some type of
1165:
53:
841:
646:
996:
charge by the UK government; sourcing existing ADRs in the secondary market (either via crossbook swaps or on exchange) instead is not subject to SDRT.
948:
809:
983:
Regulation S ADRs can be merged into a Level 1 program after the restriction period has expired, and the foreign issuer elects to do this.
768:
charge by the UK government. Depositary banks have various responsibilities to DR holders and to the issuing foreign company the DR represents.
1044:. Details can be found from its prospectus dated December 16, 2013, under Registration No. 333-192085 filed pursuant to Rule 424(b)(4) of the
1040:
called
Autohome (ATHM) offered 7,820,000 American depositary shares (ADSs) representing its 7,820,000 Class A Ordinary Shares from its
513:
695:
100:
72:
1072:
119:
702:. ADRs simplify investing in foreign securities because the depositary bank "manage all custody, currency and local taxes issues".
79:
993:
765:
947:
U.S. public shareholders are generally not permitted to invest in these ADR programs, and most are held exclusively through the
639:
488:
86:
57:
977:. This regulation means that the shares are not, and will not be registered with any U.S. securities regulation authority.
941:
615:
437:
1263:
973:
The other way to restrict the trading of depositary shares to U.S. public investors is to issue them under the terms of
68:
163:
1258:
1173:
786:
632:
389:
46:
1082:
1077:
721:
498:
808:
Level 1 shares can only be traded on the OTC market and the company has minimal reporting requirements with the
1041:
852:
714:
318:
1045:
463:
93:
745:
672:
595:
508:
1123:
Sikonathi
Mantshantsha (22 March 2013). "American Depositary Receipts: Foreign investment made easy".
675:
that represents securities of a foreign company and allows that company's shares to trade in the U.S.
888:
840:) for a U.S. company. In their filings, the company is required to follow U.S. GAAP standards or the
442:
345:
620:
1062:
741:
610:
568:
553:
523:
447:
375:
292:
170:
158:
148:
1140:
1198:
1144:
1037:
933:
676:
543:
538:
528:
473:
299:
267:
1034:
937:
590:
585:
558:
428:
404:
399:
360:
340:
304:
252:
140:
757:
548:
533:
493:
309:
247:
208:
203:
17:
1243:
1125:
1006:
867:
798:
761:
753:
683:
563:
468:
418:
380:
272:
219:
213:
193:
188:
27:
Security representing ownership of an underlying number of shares of a foreign company
1252:
1244:
Investor
Bulletin: American Depositary Receipts (from 2012, includes info about fees)
1057:
764:, creation of ADRs attracts a 1.5% creation fee; this creation fee is different than
699:
503:
478:
330:
277:
870:. If it fails to do so, it may be delisted and forced to downgrade its ADR program.
974:
694:, and may be traded like regular shares of stock. ADRs are also traded during U.S.
691:
605:
580:
350:
242:
237:
228:
198:
1199:
Intermediaries as
Arbitrageurs: Revisiting the Motivations Behind Overseas Listing
1238:
724:(GDR). Securities of a foreign company that are represented by an ADR are called
837:
833:
813:
706:
600:
413:
370:
365:
355:
262:
179:
35:
1102:
710:
908:
892:
1067:
929:
904:
896:
884:
860:
687:
325:
575:
518:
866:
While listed on these exchanges, the company must meet the exchange's
1010:
856:
1030:
257:
836:
annually. Form 20-F is the basic equivalent of an annual report (
951:, so there is often very little information on these companies.
845:
483:
1141:"How an ADR Works and the Value for Companies & Investors"
29:
812:(SEC). The company is not required to issue quarterly or
928:
Some foreign companies will set up an ADR program under
936:. Shares of companies registered under Rule 144-A are
756:
when the underlying shares are deposited in a foreign
60:. Unsourced material may be challenged and removed.
1166:"JPMorgan Celebrates 80th Anniversary of the ADR"
911:, and China Information Technology, Inc. (CNIT).
1239:SEC guide to foreign investing for U.S. citizens
1201:, Jindal Global Law Review (2015) 6(2): 193-205.
932:. This provision makes the issuance of shares a
682:Shares of many non-U.S. companies trade on U.S.
920:make up approximately 30% of all issued ADRs.
874:Sponsored Level III ADRs ("offering" facility)
640:
8:
827:Sponsored Level II ADRs ("Listing" facility)
686:through ADRs, which are denominated and pay
949:Depository Trust & Clearing Corporation
842:International Financial Reporting Standards
647:
633:
131:
120:Learn how and when to remove this message
1101:Staff, Investopedia (18 November 2003).
1093:
940:and may only be issued to or traded by
810:U.S. Securities and Exchange Commission
793:Sponsored Level I ADRs ("OTC" facility)
455:
427:
388:
285:
227:
178:
139:
1193:
1191:
964:Can be converted into multiple shares.
891:for the shares. They also must file a
924:Privately placed (SEC Rule 144A) ADRs
7:
1046:U.S. Securities Exchange Act of 1933
58:adding citations to reliable sources
1103:"American Depositary Receipt - ADR"
1033:-based company composed of various
713:on the New York Curb Exchange, the
1073:Foreign currency convertible bonds
720:They are the U.S. equivalent of a
25:
961:A fixed rate of interest is paid.
752:Each ADR is issued by a domestic
709:in 1927 for the British retailer
1172:. April 27, 2007. Archived from
969:Offshore (SEC Regulation S) ADRs
785:Unsponsored shares trade on the
705:The first ADR was introduced by
147:
34:
390:Over-the-counter (off-exchange)
45:needs additional citations for
942:qualified institutional buyers
1:
994:stamp duty reserve tax (SDRT)
616:Sustainable development goals
69:"American depositary receipt"
887:, which is the format for a
844:(IFRS) as published by the
661:American depositary receipt
1280:
954:Characteristics include:
726:American depositary shares
18:American depository shares
1083:Indian Depository Receipt
1078:Global depository receipt
958:It is a secured security.
772:ADR programs (facilities)
722:global depository receipt
499:Diversification (finance)
667:, and sometimes spelled
1170:JPMorgan Chase & Co
1042:initial public offering
853:New York Stock Exchange
715:American Stock Exchange
766:stamp duty reserve tax
464:Alternative investment
1216:secfilings.nasdaq.com
1212:"NASDAQ - SEC Filing"
975:SEC Regulation S
746:negotiable securities
740:ADRs are one type of
596:Investment management
509:Environmental finance
868:listing requirements
744:(DR), which are any
54:improve this article
1264:Depositary receipts
1197:See Datta, Pratik,
915:Restricted programs
816:in compliance with
736:Depositary receipts
673:negotiable security
621:Sustainable finance
135:Part of a series on
1063:Depositary receipt
742:depositary receipt
611:Speculative attack
376:Structured product
1259:Equity securities
1145:OTC Markets Group
1038:holding companies
934:private placement
903:Examples include
677:financial markets
657:
656:
484:Banks and banking
474:Asset (economics)
300:Credit derivative
268:Stock certificate
141:Financial markets
130:
129:
122:
104:
16:(Redirected from
1271:
1227:
1226:
1224:
1222:
1208:
1202:
1195:
1186:
1185:
1183:
1181:
1176:on April 2, 2015
1162:
1156:
1155:
1153:
1151:
1137:
1131:
1130:
1120:
1114:
1113:
1111:
1109:
1098:
938:restricted stock
787:over-the-counter
781:Unsponsored ADRs
649:
642:
635:
591:Impact investing
586:Growth investing
319:Foreign exchange
305:Futures exchange
253:Registered share
151:
132:
125:
118:
114:
111:
105:
103:
62:
38:
30:
21:
1279:
1278:
1274:
1273:
1272:
1270:
1269:
1268:
1249:
1248:
1235:
1230:
1220:
1218:
1210:
1209:
1205:
1196:
1189:
1179:
1177:
1164:
1163:
1159:
1149:
1147:
1139:
1138:
1134:
1122:
1121:
1117:
1107:
1105:
1100:
1099:
1095:
1091:
1054:
1027:
1002:
1000:ADR termination
989:
971:
926:
917:
876:
829:
795:
783:
774:
758:depositary bank
738:
698:, through U.S.
684:stock exchanges
653:
494:Climate finance
423:
409:
337:
336:
316:
315:
310:Hybrid security
248:Preferred stock
218:
209:High-yield debt
204:Government bond
126:
115:
109:
106:
63:
61:
51:
39:
28:
23:
22:
15:
12:
11:
5:
1277:
1275:
1267:
1266:
1261:
1251:
1250:
1247:
1246:
1241:
1234:
1233:External links
1231:
1229:
1228:
1203:
1187:
1157:
1132:
1126:Financial Mail
1115:
1092:
1090:
1087:
1086:
1085:
1080:
1075:
1070:
1065:
1060:
1053:
1050:
1026:
1023:
1007:reorganization
1001:
998:
988:
985:
970:
967:
966:
965:
962:
959:
925:
922:
916:
913:
875:
872:
828:
825:
814:annual reports
799:transfer agent
794:
791:
782:
779:
773:
770:
762:United Kingdom
754:custodian bank
737:
734:
717:'s precursor.
700:broker-dealers
655:
654:
652:
651:
644:
637:
629:
626:
625:
624:
623:
618:
613:
608:
603:
598:
593:
588:
583:
578:
573:
572:
571:
566:
561:
556:
551:
546:
541:
536:
531:
526:
516:
511:
506:
501:
496:
491:
486:
481:
476:
471:
469:Angel investor
466:
458:
457:
453:
452:
451:
450:
445:
440:
432:
431:
425:
424:
422:
421:
416:
410:
408:
407:
402:
396:
393:
392:
386:
385:
384:
383:
381:Swap (finance)
378:
373:
368:
363:
358:
353:
348:
343:
335:
334:
328:
321:
317:
314:
313:
307:
302:
295:
291:
288:
287:
283:
282:
281:
280:
275:
273:Stock exchange
270:
265:
260:
255:
250:
245:
240:
232:
231:
225:
224:
223:
222:
220:Securitization
216:
214:Municipal bond
211:
206:
201:
196:
194:Corporate bond
191:
189:Bond valuation
183:
182:
176:
175:
174:
173:
161:
153:
152:
144:
143:
137:
136:
128:
127:
110:September 2014
42:
40:
33:
26:
24:
14:
13:
10:
9:
6:
4:
3:
2:
1276:
1265:
1262:
1260:
1257:
1256:
1254:
1245:
1242:
1240:
1237:
1236:
1232:
1217:
1213:
1207:
1204:
1200:
1194:
1192:
1188:
1175:
1171:
1167:
1161:
1158:
1146:
1142:
1136:
1133:
1128:
1127:
1119:
1116:
1104:
1097:
1094:
1088:
1084:
1081:
1079:
1076:
1074:
1071:
1069:
1066:
1064:
1061:
1059:
1058:Cross listing
1056:
1055:
1051:
1049:
1047:
1043:
1039:
1036:
1032:
1024:
1022:
1018:
1014:
1012:
1008:
999:
997:
995:
987:Sourcing ADRs
986:
984:
981:
978:
976:
968:
963:
960:
957:
956:
955:
952:
950:
945:
943:
939:
935:
931:
930:SEC Rule 144A
923:
921:
914:
912:
910:
906:
900:
898:
894:
890:
886:
880:
873:
871:
869:
864:
862:
858:
854:
849:
847:
843:
839:
835:
826:
824:
821:
819:
815:
811:
806:
802:
800:
792:
790:
788:
780:
778:
771:
769:
767:
763:
759:
755:
750:
747:
743:
735:
733:
731:
727:
723:
718:
716:
712:
708:
703:
701:
697:
696:trading hours
693:
689:
685:
680:
678:
674:
670:
666:
663:(abbreviated
662:
650:
645:
643:
638:
636:
631:
630:
628:
627:
622:
619:
617:
614:
612:
609:
607:
604:
602:
599:
597:
594:
592:
589:
587:
584:
582:
579:
577:
574:
570:
567:
565:
562:
560:
557:
555:
552:
550:
547:
545:
542:
540:
537:
535:
532:
530:
527:
525:
522:
521:
520:
517:
515:
512:
510:
507:
505:
504:Eco-investing
502:
500:
497:
495:
492:
490:
487:
485:
482:
480:
479:Asset pricing
477:
475:
472:
470:
467:
465:
462:
461:
460:
459:
456:Related areas
454:
449:
446:
444:
441:
439:
436:
435:
434:
433:
430:
426:
420:
417:
415:
412:
411:
406:
403:
401:
398:
397:
395:
394:
391:
387:
382:
379:
377:
374:
372:
369:
367:
364:
362:
359:
357:
354:
352:
349:
347:
344:
342:
339:
338:
332:
331:Exchange rate
329:
327:
323:
322:
320:
311:
308:
306:
303:
301:
297:
296:
294:
290:
289:
286:Other markets
284:
279:
278:Watered stock
276:
274:
271:
269:
266:
264:
261:
259:
256:
254:
251:
249:
246:
244:
241:
239:
236:
235:
234:
233:
230:
226:
221:
217:
215:
212:
210:
207:
205:
202:
200:
197:
195:
192:
190:
187:
186:
185:
184:
181:
177:
172:
169:
165:
162:
160:
159:Public market
157:
156:
155:
154:
150:
146:
145:
142:
138:
134:
133:
124:
121:
113:
102:
99:
95:
92:
88:
85:
81:
78:
74:
71: –
70:
66:
65:Find sources:
59:
55:
49:
48:
43:This article
41:
37:
32:
31:
19:
1219:. Retrieved
1215:
1206:
1178:. Retrieved
1174:the original
1169:
1160:
1148:. Retrieved
1135:
1124:
1118:
1106:. Retrieved
1096:
1028:
1019:
1015:
1003:
990:
982:
979:
972:
953:
946:
927:
918:
901:
881:
877:
865:
850:
830:
822:
807:
803:
796:
784:
775:
751:
739:
729:
725:
719:
704:
692:U.S. dollars
681:
668:
664:
660:
658:
606:Market trend
581:Greenwashing
438:Participants
243:Growth stock
238:Common stock
229:Stock market
199:Fixed income
167:
116:
107:
97:
90:
83:
76:
64:
52:Please help
47:verification
44:
707:J.P. Morgan
601:Market risk
414:Spot market
371:Reinsurance
366:Real estate
356:Mutual fund
293:Derivatives
263:Stockbroker
180:Bond market
1253:Categories
1089:References
1029:In 2013 a
889:prospectus
859:, and the
711:Selfridges
669:depository
443:Regulation
171:Securities
80:newspapers
1180:March 18,
909:Petrobras
893:Form 20-F
838:Form 10-K
834:Form 20-F
818:U.S. GAAP
688:dividends
544:corporate
519:Financial
341:Commodity
1150:18 March
1068:Form F-6
1052:See also
1035:offshore
944:(QIBs).
905:Vodafone
897:Form 6-K
885:Form F-1
861:NYSE MKT
855:(NYSE),
569:services
559:personal
554:forecast
524:analysis
448:Clearing
400:Forwards
326:Currency
164:Exchange
1221:17 June
1108:17 June
1025:Example
883:file a
671:) is a
576:Fintech
539:betting
529:analyst
429:Trading
405:Options
94:scholar
1011:merger
857:NASDAQ
564:public
361:Option
166:
96:
89:
82:
75:
67:
1031:China
549:crime
534:asset
419:Swaps
351:Money
258:Stock
101:JSTOR
87:books
1223:2017
1182:2015
1152:2015
1110:2017
846:IASB
730:ADSs
489:Bull
73:news
1013:.
1009:or
732:).
690:in
665:ADR
659:An
514:ESG
346:ETF
56:by
1255::
1214:.
1190:^
1168:.
1143:.
1048:.
907:,
899:.
863:.
848:.
801:.
679:.
1225:.
1184:.
1154:.
1129:.
1112:.
728:(
648:e
641:t
634:v
333:)
324:(
312:)
298:(
168:·
123:)
117:(
112:)
108:(
98:·
91:·
84:·
77:·
50:.
20:)
Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.
