What is the Full form of ADR? | Learn More About ADR
ADB Full Form – ADR or American Depository Receipts means a negotiable certificate of title to a number of shares in a non-US company which are deposited in an overseas bank. The stocks of most foreign companies that trade in the U.S. markets are traded as American Depository Receipts. These stocks are issued by U.S. depository banks. Each American Depository Receipt represents one or more shares of foreign stock or a fraction of a share.
American Depository Receipts were first introduced in the year 1927. Before ADRs, investing in foreign companies was full of hurdles for the US investors. American investors could purchase the shares on international exchanges only, and that meant dealing with currency exchange rates and regulatory differences in foreign jurisdictions. ADRs can be purchased from brokers and dealers. The brokers and dealers obtain it from two ways – first, buying already-issued ADRs in the US financial markets, second, by creating new ones. There are two types of ADRs – Sponsored ADR and Non-Sponsored ADR. There are three levels of ADRs – Sponsored Level I, Sponsored Level II and Sponsored Level III.