DEFINITION of 'International Depository Receipt - IDR'
A negotiable certificate issued by a bank representing ownership of stock of a foreign company held by the bank in trust. The International Depository Receipt (IDR) is known as the American Depository Receipt (ADR) in the United States; ADRs represents stocks of quality issuers from a number of developed and emerging markets. In Europe, IDRs are known as Global Depository Receipts, and trade on the London, Luxembourg and Frankfurt exchanges.
BREAKING DOWN 'International Depository Receipt - IDR'
The biggest advantage of IDRs is that a foreign company does not have to comply with all the issuing requirements of the country where it will be traded, making it easier - and cheaper - for the company to trade in the overseas jurisdiction than if it were to seek a full-fledged listing.
IDRs generally represent fractional ownership of the underlying stock, with each IDR representing one, two, three or even 10 shares. The price of the IDR usually trades close to the value of the underlying shares on a currency-conversion basis, but occasional divergences may give rise to arbitrage opportunities.