Читать книгу Fundamentals of Financial Instruments - Sunil K. Parameswaran - Страница 55

Dual or multiple listing allows the shares of a company to be traded on the exchanges of many different countries. Foreign equity is traded in global markets, in the form of Depository Receipts (DRs). On the US exchanges, they are traded in the form of American Depository Receipts (ADRs). Such securities are special shares of foreign equity that are priced in US dollars. The issuance of such assets facilitates the ownership of foreign equity by American residents. An ADR is essentially a receipt issued by a depository bank in the United States that is backed by foreign shares that are deposited with a custodian bank in the country of issue of the original shares. ADRs are quoted and traded in US dollars just like domestic US shares.

The mechanism of issuing ADRs is as follows. A US depository bank will acquire shares of the foreign company in its domestic market. These shares will then be deposited with a local custodian bank in the foreign country. The US depository bank will then issue ADRs to the investors in the United States, where each ADR will correspond to a specified number of foreign shares.

Shareholders receive dividends in US dollars. The depository takes on the task of collecting dividends in the foreign currency, converting the dividends to dollars, and making payments.

An ADR may represent either a fraction or a multiple of the underlying shares, packaged in such a way that it will trade at the appropriate price range in the United States. This can be illustrated with the help of an example.