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What is an American Depository Receipt?
What is an American Depository Receipt?
Updated over a week ago

What is an American Depository Receipt (ADR)?

American Depository Receipts (ADR’s) are issued by American banks, and are certificates that represent shares of foreign companies. ADR’s allow foreign companies to trade their shares on US stock exchanges. This, in turn, allows American investors to invest in foreign companies without transacting in foreign markets and also allows foreign companies to raise capital.

There are three types of ADR programs:

Level 1: This is the lowest level and shares are traded in the over-the-counter market. Due to their OTC status, there are minimal reporting requirements with the Securities Exchange Commission (SEC).*

Level 2: Shares can be listed on an exchange. At this level, companies are required to file annual reporting with the Securities Exchange Commission and must meet listing requirements for the exchange.

Level 3: The highest ADR level, which requires stricter reporting protocols and allows companies to raise capital.

The banks issuing these certificates may charge a custodial fee to cover the costs associated with maintaining the ADR. These fees typically range from $0.01 - $0.03 per share, and the amount charged as well as the timing of the charge may vary per each ADR. Please refer to your ADR prospectus for further information. These fees may typically be reflected as a line item on your statement and will be deducted from available cash in your account.

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*Trading in over-the-counter (“OTC”) equity securities carries a high degree of risk and may not be appropriate for all investors. Public does not provide investment advice, and therefore any investment decision you make or strategy you utilize is done so at your sole discretion and risk. For full disclosures and risk associated with OTC securities, please review OTC & Low-Priced Securities Risk Disclosures at

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