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 Public company, publicly traded Security (finance), securities. The depositary receipt trades on a local stock exchange. Depositary rec ...
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 St ...
, which purchases
shares of foreign companies, creates a
security
Security is protection from, or resilience against, potential harm (or other unwanted coercion). Beneficiaries (technically referents) of security may be persons and social groups, objects and institutions, ecosystems, or any other entity or ...
on a local
exchange
Exchange or exchanged may refer to:
Arts, entertainment and media Film and television
* Exchange (film), or ''Deep Trap'', 2015 South Korean psychological thriller
* Exchanged (film), 2019 Peruvian fantasy comedy
* Exchange (TV program), 2021 Sou ...
backed by those shares. They are the global equivalent of the original
American depositary receipts (ADR) on which they are based. GDRs represent ownership of an underlying number of
shares
In financial markets, a share (sometimes referred to as stock or equity) is a unit of equity ownership in the capital stock of a corporation. It can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Sha ...
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 we ...
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. (stylized as JPMorganChase) is an American multinational financial services, finance corporation headquartered in New York City and incorporated in Delaware. It is List of largest banks in the United States, the largest ba ...
,
Citigroup
Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services company based in New York City. The company was formed in 1998 by the merger of Citicorp, t ...
,
Deutsche Bank
Deutsche Bank AG (, ) is a Germany, German multinational Investment banking, investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Stock Exchange.
...
, and
The Bank of New York Mellon
The Bank of New York Mellon Corporation, commonly known as BNY, is an American international financial services company headquartered in New York City. It was established in its current form in July 2007 by the merger of the Bank of New York an ...
. GDRs are often listed in the
Frankfurt Stock Exchange
The Frankfurt Stock Exchange (, former German name: , ''FWB'') is the world's 3rd oldest and 12th largest stock exchange by market capitalization. It has operations from 8:00 am to 10:00 pm ( German time).
Organisation
Located in Frankfurt, ...
,
Luxembourg Stock Exchange
The Luxembourg Stock Exchange, LuxSE () 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.
History
A law establishing a stock exchange in Luxemb ...
, and the
London Stock Exchange
The London Stock Exchange (LSE) is a stock exchange based in London, England. the total market value of all companies trading on the LSE stood at US$3.42 trillion. Its current premises are situated in Paternoster Square close to St Paul's Cath ...
, 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 ...
# 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 Public company, publicly traded Security (finance), securities. The depositary receipt trades on a local stock exchange. Depositary rec ...
*
American Depositary Receipt
*
European depositary receipt A European depositary receipt (EDR) represents ownership in the shares of a non-European company that trades in European financial markets. It is a European equivalent of the original American depositary receipts (ADR). The EDR is issued by a ba ...
*
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 ...
*
Cross listing
Cross-listing (or multi-listing, or interlisting) of shares is when a firm lists its equity shares on one or more foreign stock exchange in addition to its domestic exchange. To be cross-listed, a company must thus comply with the requirements of ...
References
External links
Deutsche Bank's depositary receipt websiteBNY Mellon ADRsFrankfurt Stock Exchange
Depositary receipts
Banking
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