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Glossary Term: DEPOSITORY RECEIPT

Definition(s) for DEPOSITORY RECEIPT:


1. ) refers to a negotiable certificate that represents a company's publicly traded debt or equity. Depositary receipts are created when a company's shares or bonds are delivered to a depositary's custodian bank, which instructs the depositary to issue the receipts. Depositary receipts facilitate trading of foreign securities. An example is the American Depositary Receipt.

2. ) Commonly known as 'DRs', Depositary Receipts are negotiable certificates that enable domestic investors to own shares in foreign companies. DRs are created when a broker purchases a non-UK company's shares in the home stock market and delivers those shares to the depositary's local custodian bank. The custodian then instructs the depositary bank to issue DRs to the investor. Each DR represents a given number of a company's shares and can trade as freely as any other security in the UK.  Several types of DRs can be listed and traded in London, including Global Depositary Receipts (GDRs) and American Depositary Receipts (ADRs) that are denominated in US dollars.



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