What is ADR and GDR?

ADR stands for American Depository Receipts while GDR is Global Depository Receipts.

Depository Receipt is a type of negotiable (transferable) financial security that is traded on a local stock exchange but represents a security (usually equity) that is issued by a foreign publicly listed company. The depository receipt is a physical certificate held by the investors while a foreign custodian bank holds the shares represents the depository receipt.

ADRs are listed on the US stock exchange like NYSE (New York Stock Exchange) while GDRs are listed on the European stock exchanges like London stock exchange (LSE) or Luxembourg exchange. They are generally issued in dollars and euros respectively.

ADRs / GDRs enable the issuing company to raise capital in the world market. For the investor, depository receipt offer diversified investment options.

Recently IDR (Indian Depository Receipts) was also launched for Indian investors with Standard Chartered Plc being the first company to do so.