understanding financial jargon
American Depositary Receipt (ADR)
These are a class of investment which allows American invetsors to own shares in foreign companies without having to worry about foreign currencies and tax treatments. American Depositary Receipts are issued by US investments banks as dollar denominated certificates (the ADR) which represents the foreign shares but which can be traded on US stock exchanges. The concept has proved popular, with the creation of Global Depositary Receipts which are useful for trading in foreign markets where the foreign market is usually hard to access for the retail investor.
It should be noted that although the risk of owning the foreign shares directly has been removed, there is now a risk of third party default, because the investment bank owns the underlying assets, and may not be able to pass on the benefits to ADR holders if they get into financial difficulty.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
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