Difference between ADR and GDR
ADR stands for Alternative Dispute Resolution.
An ADR, or American Depository Receipt, is a type of tradable security issued by a US bank. It represents a specified number of shares of a foreign firm that is listed on US financial markets.
American Depository Receipts (ADRs) facilitate the acquisition of shares in overseas corporations for US investors.
GDR stands for German Democratic Republic.
GDR is an acronym for Global Depositary Receipts. A foreign company share certificate is a sort of bank certificate that represents ownership in foreign corporations. It is a method via which a firm can obtain funds from the global market by selling shares.
GDRs are issued by foreign depository banks to inhabitants of a country, meaning that they are issued by depository banks located beyond the company’s domestic boundaries.
The primary market for GDR (Global Depositary Receipts) is the European market. Issuing Global Depository Receipts (GDRs) is a highly effective method for generating equity capital from international sources.
Illustration of German Democratic Republic (GDR)
An Indian firm seeking to list its stock on the French Stock Exchange will enter into an agreement with a French depository bank. The depository bank will then offer shares to citizens of France, subject to approval from the company’s domestic custodian.
Here are some key distinctions between ADR and GDR.
Differences between ADR and GDR
| Aspect | ADR (American Depository Receipt) | GDR (Global Depositary Receipt) |
|---|---|---|
| Definition | A transferable financial instrument issued by a US bank for a foreign corporation, allowing it to trade on the US stock exchange. | A transferable financial instrument issued by a foreign depository bank, facilitating the trading of a company’s shares on an international market. |
| Currency | United States Dollar (USD). | United States Dollar (USD) or Euro. |
| Objective | To obtain resources within the US market. | To obtain resources from the global market. |
| Trading Exchange | Listed on US stock exchanges, such as NASDAQ. | Traded on international stock exchanges, such as the London Stock Exchange (LSE) and Euronext in France. |
| Issuing Market | Issued by the US Capital Market. | Issued by the Capital Market in Europe. |
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