International Depository Receipt - IDR

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.

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RELATED FAQS
  1. Which of the following best describes American Depository Receipts (ADRs) ...

    The correct answer is b): ADRs are used to trade foreign securities in the United States. Instead of buying shares of foreign ... Read Answer >>
  2. Why would an investor want to hold an American Depository Receipt rather than the ...

    Learn about the advantages for investors of using American Depositary Receipts instead of investing directly in the underlying ... Read Answer >>
  3. How are American Depository Receipts (ADRs) exchanged?

    Learn specifics about American depositary receipts, including how they are exchanged and some of their advantages and disadvantages. Read Answer >>
  4. What parties are involved in the creation of an American depositary receipt?

    An American depositary receipt (ADR) is a legal certificate issued by a recognized U.S. bank that represents a specific number ... Read Answer >>
  5. What are the differences between Levels I, II, and III American Depository Receipts ...

    Understand the difference between sponsored American depositary receipts categorized within Level I, II or III. Read Answer >>
  6. Is there a difference between ADR and ADS?

    American depositary receipts (ADRs) allow foreign equities to be traded on U.S. stock exchanges; in fact, this is how the ... Read Answer >>
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