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, which purchases
shares of foreign companies, creates a
security on a local
exchange 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 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 which is denominated in some freely convertible currency.
GDRs enable a company, the issuer, to access investors in
capital markets 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,
Deutsche Bank, 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,
Luxembourg Stock Exchange, 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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