A Global Depositary Receipt (GDR) is a negotiable certificate representing shares in a foreign company, allowing those shares to trade on international exchanges outside the company's home market.
How GDRs Work
A depositary bank holds the underlying shares in the home market and issues tradable receipts against them. These GDRs then trade on international exchanges, typically denominated in USD, though EUR and GBP are also common.
Major GDR Trading Venues
| Exchange | Role | Typical Issuers |
|---|---|---|
| London Stock Exchange | Largest GDR market | Emerging markets, Russian (historically) |
| Luxembourg Stock Exchange | Major European venue | Asian, Eastern European |
| Deutsche Börse | Frankfurt listings | Global issuers seeking European access |
GDR vs ADR
| Feature | GDR | ADR |
|---|---|---|
| Trading locations | Multiple non-US exchanges | US exchanges (NYSE, NASDAQ) |
| Geographic focus | Global/European | United States only |
| Currency | USD, EUR, GBP | USD |
| Regulation | Multiple jurisdictions | SEC regulated |
Practical Considerations
Each GDR has a unique ISIN separate from the underlying shares. Settlement typically follows T+2 standards like ordinary shares. Some GDRs include conversion rights, allowing holders to exchange them for the underlying shares, though this may involve currency conversion and cross-border settlement complexity.