American Depository Receipt (ADR) - International Finance, Interdisciplinary issues in Indian Commer Video Lecture | Interdisciplinary Issues in Indian Commerce - B Com

American Depositary Receipts are one of
the most convenient and popular ways for
investors to buy stocks of companies
based outside the US ad ours exists
because many foreign companies don't
want to bother with the expanse and
hassle of directly listing their shares
on US stock exchanges
here's how ad ARS work a broker will buy
the shares of foreign companies trading
on their home exchanges and deliver
those to a custodian bank then the
broker has another bank called a
depository bank issue shares called
receipts on the basis of those shares
held by the custodian bank those
receipts can then trade on a US exchange
or over-the-counter just like any other
share of stock the prices are quoted in
US dollars dividends are paid in US
Dollars and the buying selling and
settlement process is the same as with
shares that are directly listed on the
US exchanges there are several types of
ADR s such as unspun surday TRS which
have no involvement or support from the
foreign company itself because the
company is not supporting this issue it
may not release English versions or
financial information or news releases
and unspun surd a DRS are often not
liquid by contrast an overseas company
can choose to actively support an ADR
program and use it to access the u.s.
capital markets level one ADR s trade
over-the-counter this does not require
full SEC registration nor does it
require the company to report results
according to US accounting guidelines
level 2 and level 3 a DRS can be listed
on US exchanges but the companies must
register with the SEC report results in
compliance with US accounting laws and
offer regular reports all of this makes
it easier for Americans to invest