Sponsored ADR

By | 2017-09-13T15:41:14+00:00 13th September 2017|

An American depositary receipt (ADR) comes into being when a foreign company, via a bank, issues an instrument backed by shares from the company’s local market are the underlying asset. A sponsored ADR establishes a legal relationship between the ADR and the foreign company, which absorbs the cost of issuing the security. Unsponsored ADRs may only be traded in the over-the-counter market, while sponsored ADRs are permitted to be listed on major exchanges.