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INTRODUCTION
AMERICAN DEPOSITARY RECEIPT(ADR)
It represents ownership in the shares of a non-U.S. company and
trades
in U.S. financial markets. The stock of many non-US companies
trade on US
stock exchanges through the use of ADRs. ADRs enable U.S.
investors to buy
shares in foreign companies without the hazards or
inconveniences of cross-
border & cross-currency transactions. ADRs carry prices in
US dollars, paydividends in US dollars, and can be traded like the
shares of US-based
companies.
Individual share of a foreign corporation represented by an ADR
are called
American Depository Shares (ADS).
GLOBAL DEPOSITORY RECEIPT(GDR)
It is a certificate issued by a depository bank, which purchases
shares of
foreign companies and deposits it on the account. GDRs represent
ownership of
an underlying number of shares.
GDRs are listed on a European stock exchange such as London or
Luxembourgand clear through the Euromarkets clearing systems,
Euroclear and Clearstream.
GDRs may also be listed on other exchanges, such as Dubai and
Singapore. The
ability of retail investors to purchase GDRs will depend on the
type and location
of the listing. In general, however, GDR offerings are aimed at
institutional
investors and depending on the exchange, they can then be
purchased by retail
investors in the secondary market.
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EXPECTED CONTRIBUTION OF THE STUDY
The study will contribute to our Knowledge of how the ADR
(American
Depository Receipts) and GDR (Global Depository Receipts) works
at Macroand Micro level.
It will also contribute to our knowledge of overseas market, its
working
and how the process of trading is carried out in the
international stock
exchanges.
