Depositary receipts

Welcome. Today's topic is depository receipts, an important bridge connecting investors to foreign markets. A depository receipt is a negotiable financial instrument issued by a bank that represents shares in a foreign company. Rather than buying shares directly on a foreign exchange, investors can trade these instruments on their home market, making global investment more accessible and efficient. As a result, depository receipts help overcome barriers such as currency differences and complicated settlement procedures, broadening global investment opportunities for both institutions and individuals. There are several main types of depository receipts in global markets. The most widely known are American depository receipts or ADRs, which allow United States investors to purchase shares in non United States companies through United States exchanges, such as the New York Stock Exchange or NASDAQ. In the United Kingdom and some Commonwealth countries, similar instruments are called global depository receipts or GDRs. These typically trade on international markets like the London Stock Exchange. The structure is generally similar, but the listing requirements, regulatory environment, and investor base may differ depending on the location. The process begins when a foreign company deposits its shares with a local custodian bank in its home country. A depository bank based in the investors country, then issues depository receipts that represent ownership of those shares. The receipts can be traded on the local exchange,