The Full Form of ADR
ADR Full Form – The Full Form of ADR in terms of banking sector is American Depository Receipt, which is a certificate issued by a US depository bank on a negotiable basis. It is used to represent a specified number of shares for investment in the stock of a foreign company. It trades on the US trade markets just like any normal stocks in the US market, and helps to trade. The ADR represents a feasible and liquid way for the US investors to purchase various stocks in companies in foreign companies. The benefit isn’t just one-sided as the foreign companies also benefit from the ADRs and they make it much easier for the company to attract American investors instead of merely working on the basis of the normal angel investment schemes.
The ADRs are denominated in USD and have the underlying security of a US institution based overseas. ADR holders never have to concern themselves with exchanging the foreign currency in the forex markets, or about the exchange rates themselves since this will be taken care off by the US Repository Financial Institutions. The stocks are first purchased by the bank, and then held as shares in their inventory. Once the ADR is issued, the bank will then show the list on the New York Stock Exchange, or the AMEX. This can then be purchased by interested investors just like any regular stock, and then be used for trading among other investors or banks for a profit.
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