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American Depositary Receipt

An American Depositary Receipt (ADR) is how the stock of most foreign companies trades in United States stock markets.

Each ADR is issued by U.S. depositary banks and represents one or more shares of a foreign stock or a fraction of a share. If investors own an ADR they have the right to obtain the foreign stock it represents, but U.S. investors usually find it more convenient to own the ADR. The price of an ADR corresponds to the price of the foreign stock in its home market, adjusted for the ratio of ADRs to foreign company shares.

External link

SEC guide to foriegn investing for U.S. citizens