What Are APIs in Algo Trading?

ADR is a certificate issued by U.S. banks, representing foreign company shares, allowing U.S. investors to trade international stocks on American exchanges.

American Depositary Receipt Example

An example of an ADR is Alibaba Group’s ADR on the NYSE, allowing U.S. investors to invest in Alibaba without trading on foreign exchanges.

How Does An ADR Work?

An ADR works by representing foreign company shares, issued by U.S. banks, allowing American investors to trade them on U.S. exchanges without overseas involvement.

Types Of ADRs

Types of ADRs are Level I (minimal rules), Level II (listed, SEC compliance), Level III (capital raising), Rule 144A (private), Sponsored (company involved), & Unsponsored.

ADRs Advantages

ADRs simplify foreign stock trading for U.S. investors, offer dividends in USD, ensure SEC compliance, reduce currency risk, enhance liquidity, and improve market access.

American Depositary Receipts Disadvantages

ADRs may have higher fees, currency risk, limited voting rights, complex taxes, liquidity issues, reliance on agreements & exposure to foreign market risks.