Depositary Receipts (DRs)

Definition:

A derivative-type instrument, issued by a depositary bank (in its capacity as bare trustee/ agent), which represents economic and beneficial ownership in the equity of an underlying issuer.

Legal ownership of the underlying shares vests in the depositary bank who holds the underlying shares in custody via a designated local Custodian in the domestic market. Beneficial ownership in Depositary Receipts is conveyed through the depositary bank to the holders of the Depositary Receipts.

The most common types of Depositary Receipts programs are: (i) American Depositary Receipts (ADRs) programs which give companies outside the United States access to the US capital markets; and (ii) Global Depositary Receipts (GDRs) programs which provide exposure to the global markets outside the issuer’s home market.

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