Difference Between ADR and GDR

Since the inception of civilization, humans are involved in selling and purchasing goods. And they have been practicing this not only at the regional level but also at the global level as well.

During the time of Harappan civilization people of Mohenjodaro used to trade with Mesopotamian civilization. And we are talking about the time when money or currencies were not in practice.

They used to follow the barter system. So with the growth of trade, the production of goods also cultivated over a while. Companies came into existence.

Then these companies started taking investments from local people. With time many things have happened during which the Industrial Revolution also took place.

People started trading with much more intensity. But with this, the need for funds also started rising. 

ADR vs GDR

The difference between ADR and GDR is that ADR stands for American Depository Receipt issued in America whereas GDR stands for Global Depository Receipt issued in Europe. ADR deals with US stock market while GDR deals with international stock market where US stock market is excluded.

ADR vs GDR

ADR allows foreigners to trade in US whereas GDR allows foreigners to trade all over the world.

Comparison Table

Parameter of ComparisonADRGDR
CurrenciesUS DollarEuro
AccessCompanies listed in NYSECompanies listed in LSE and Euronext(France)
MarketRetail Investor MarketInstitutional Market
LiabilityLegally more complicatedLess as compare to ADR
CostHighLow

What is ADR?

NYSE (New York Stock Exchange), Nasdaq, America Stock Exchange, Chicago Stock Exchange, are some of the stock exchanges that are active in the USA and have various companies listed. Some of the major global giants like Amazon, Facebook, Apple, General Motors, etc have been listed in these stock exchanges.

Investors from all around the world express their interest in investing in these companies and the return is much higher than any other company in the world. Keeping in mind and to safeguard the interest of local investors, the government has made the process very complicated through legal bounds and has also made very costly

Still, if an American company wants foreign investment then the company will release ADR for foreign investors via the bank and fulfill the requirement.

adr

What is GDR?

Many global giants are listed on Americas’ stock exchange but not all. There are many other famous companies that are not present in America but have very large market capitalization.

And from time to time they also need funds to meet the requirement. So for them, GDR is available.

GDR stands for Global Depository Receipt. As the name itself bear the word Global which means the whole world.

So it is the depository receipt issued by every other country except America.

gdr

Main Differences Between ADR and GDR

ADR ( American Depository Receipt)

If any investor who is not an American citizen and wants to invest in USA company through its shares listed in New York Stock Exchange (NYSE) and in US dollars, will receiver ADR from the American bank.

GDR (Global Depository Receipt)

If an investor invests in UK LSE (London Stock Exchange) shares of UK Company in Euro gets a receipt of GDR.

References

  1. https://investinganswers.com/dictionary/a/american-depositary-receipt-adr
  2. https://www.sciencedirect.com/science/article/pii/S0927538X06000151
  3. https://www.semanticscholar.org/paper/The-Effect-of-ADR-%26-GDR-Listing-on-Shareholder%E2%80%99s-Chaturvedula/0c2762c68ed5fefb526390981bbb50e9d815d283
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Umesh
Umesh

Learning ADR and GDR had never been so easy.

Piyush Yadav
Piyush Yadav
Reply to  Umesh

Hi Umesh.

thanks a lot, happy to help.

Jay
Jay

I am into the investment industry and stopped here to find the difference between ADR and GDR. I have not been disappointed. Great info.

Piyush Yadav
Piyush Yadav
Reply to  Jay

Glad that our website askanydifference was of help to you

Brayden
Brayden

Thanks for explaining ADR and GDR in so simple way

Piyush Yadav
Piyush Yadav
Reply to  Brayden

Happy to help you Brayden

Sehatas
Sehatas

I am in the USA and I want to make some international investments. After reading this, I think ADR will be the best option for me.