ADR (American Depositary Receipts)

Depository Receipts (DR), also known as deposit receipts or stock certificates, refer to negotiable certificates circulating in a country's securities market, which belong to the financial derivatives of corporate financing business. Taking stocks as an example, depositary receipts are generated in this way: in order to make its stocks circulate in foreign countries, a Chinese company in a certain country entrusts a certain amount of stocks to an intermediary institution (usually a bank, called a depository bank or a trustee bank) for safekeeping, and the depository bank informs foreign depositary banks to issue depositary receipts representing the shares locally, and then the depositary receipts begin to be traded in foreign stock exchanges or over-the-counter markets. Depositary receipts are owned by half of the people, including issuing companies and depository institutions within H, and depository banks, securities underwriters and investors abroad. From the investor's point of view, depositary receipts are negotiable stock certificates issued by depository banks, which prove that a certain amount of shares of a foreign company have been deposited with the bank's custody institution in foreign countries, and the holder of the certificates is actually the owner of the deposited shares, and all the rights are the same as those of the original stock holders. Depositary receipts generally represent company stocks, but sometimes they also represent bonds.

American Depositary Receipts (ADR) are depositary receipts issued to American investors and traded in the American securities market. Depositary Receipts issued to Singapore investors and traded in Singapore stock market are called Singapore Depositary Receipts (SDR). If there is more than one issuer, it is called Global Depositary Receipt (GDR). But in essence GDR and ADR are the same thing. Both of them are priced in US dollars, traded and delivered in the same standard, and their dividends are paid in US dollars. Moreover, the services provided by depository banks and the terms and guarantees of relevant agreements are the same. The word "global" replaces the word "United States" together only for marketing reasons.

ADR solves the trading difficulties caused by the differences in securities trading system, convention, language and foreign exchange management between the United States and foreign countries, and is an important financial tool for foreign companies to raise funds in the American market. It is also the most widely accepted form of foreign securities for American investors. In order to protect the interests of domestic investors, American law stipulates that pension funds of legal entities and private enterprises (whose funds still come from ordinary people) cannot invest in stocks of companies outside the United States, but DR issued by foreign enterprises in the United States is regarded as American securities and can be invested.