DEFINITION of 'Y'

A letter that appears on a Nasdaq stock symbol specifying that a particular stock is an American Depositary Receipt. An American Depositary Receipt (ADR) is a negotiable certificate that represents one or more shares of foreign stock or a fraction of a share. ADRs are traded on a U.S. exchange and are issued by a U.S. depositary bank. ADRs were introduced in response to the difficulties involved with buying shares in foreign corporations, including the challenges of trading at different prices and currency values. U.S. banks and brokerages can purchase bulk lots of shares from the foreign corporation, bundle the shares into groups and reissue them as ADRs on the New York Stock Exchange, American Stock Exchange or the Nasdaq.

BREAKING DOWN 'Y'

Nasdaq listed securities have four or five characters. When a fifth character appears, it identifies the issue as being one that is other than a single issue of common stock or capital stock. The Y identifies the stock as an American Depositary Receipt. These issues have distinct advantages in that they are a convenient and cost-effective method of buying shares in a foreign corporation. When an investor buys or sells ADRS, he or she is trading in the U.S. market and the trade will clear in U.S. dollars. Investors can invest internationally in a variety of ways including ADRs, mutual funds, exchange-traded funds, U.S.-traded foreign stocks or direct investments in foreign markets.

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RELATED FAQS
  1. Why are big foreign companies considering delisting their American depositary receipts?

    American depositary receipts (ADRs) were developed to give investors an easier way to invest in foreign companies. An ADR ... Read Answer >>
  2. 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 >>
  3. Does a company's American depositary share equal one share of common stock?

    American depositary shares (ADS) come into play when a foreign company wants its shares to trade on a major American exchange. ... Read Answer >>
  4. What parties are involved in the creation of an American depositary receipt?

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