{"id":15842,"date":"2026-09-02T13:00:21","date_gmt":"2026-09-02T07:30:21","guid":{"rendered":"https:\/\/lakshmishree.com\/blog\/?p=15842"},"modified":"2026-09-02T13:00:32","modified_gmt":"2026-09-02T07:30:32","slug":"what-is-adr-in-stock-market","status":"publish","type":"post","link":"https:\/\/lakshmishree.com\/blog\/what-is-adr-in-stock-market\/","title":{"rendered":"What is ADR in the Stock Market? Meaning, Types, Benefits, Risks &amp; How It Works"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Investing is no longer limited to companies listed in your home country. Today, investors can explore businesses from different parts of the world and add international exposure to their portfolios. But buying foreign stocks directly may involve different exchanges, currencies, processes and found its home-country stock exchange difficult to access. This is where <strong>what is ADR in stock market<\/strong> becomes relevant. ADRs provide a way to access eligible foreign companies through the US market.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s understand how they work, their types, benefits and risks.<\/p>\n\n\n\n<h2 id=\"key-takeaways\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-f2958351843c19f3426a18a2a8b0791b\"><strong>Key Takeaways<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>ADR in stock market - <\/strong>It is a US-traded security that represents an ownership interest in shares of a foreign company.<\/li>\n\n\n\n<li><strong>US-Dollar Trading - <\/strong>ADRs are generally denominated and traded in US dollars.<\/li>\n\n\n\n<li><strong>Different Types - <\/strong>They are commonly classified into Level 1, Level 2 and Level 3 programs.<\/li>\n\n\n\n<li><strong>Understand the Ratio - <\/strong>One ADR can represent one, several, or a fraction of the underlying foreign shares.<\/li>\n\n\n\n<li><strong>Benefits - <\/strong>Access to Foreign Companies, Portfolio Diversification, Easier Access to International Markets, Potential Dividend Income, US Market Accessibility<\/li>\n\n\n\n<li><strong>Risks Still Apply - <\/strong>Currency movements, <a href=\"https:\/\/lakshmishree.com\/blog\/what-is-india-vix-volatility-index\/\">market volatility<\/a>, liquidity, fees and regulatory factors can affect ADR investments.<\/li>\n<\/ul>\n\n\n\n<div class=\"wp-block-rank-math-toc-block\" id=\"rank-math-toc\"><h2>Table of Content<\/h2><nav><ul><li class=\"\"><a href=\"#what-is-adr-in-the-stock-market\">What is ADR in Stock Market?<\/a><\/li><li class=\"\"><a href=\"#how-does-an-adr-work-and-how-is-its-price-determined\">How Does an ADR Work and How Is Its Price Determined?<\/a><ul><\/ul><\/li><li class=\"\"><a href=\"#types-of-ad-rs\">Types of ADRs<\/a><ul><\/ul><\/li><li class=\"\"><a href=\"#how-to-trade-ad-rs\">How to Trade ADRs?<\/a><\/li><li class=\"\"><a href=\"#what-are-the-benefits-of-ad-rs\">What Are the Benefits of ADRs?<\/a><\/li><li class=\"\"><a href=\"#what-are-the-risks-of-investing-in-ad-rs\">What Are the Risks of Investing in ADRs?<\/a><\/li><li class=\"\"><a href=\"#ad-rs-for-indian-investors-what-should-you-know\">ADRs for Indian Investors: What Should You Know?<\/a><\/li><li class=\"\"><a href=\"#conclusion\">Conclusion<\/a><\/li><li class=\"\"><a href=\"#frequently-asked-questions\">Frequently Asked Questions<\/a><ul><\/ul><\/li><\/ul><\/nav><\/div>\n\n\n\n<h2 id=\"what-is-adr-in-the-stock-market\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-17da7a22e7e021d0e8d987960c739088\"><strong>What is ADR in Stock Market?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">An <strong>American Depositary Receipt<\/strong> is a US-traded security that represents an ownership interest in shares of a foreign company. These underlying shares are held by a custodian in the company\u2019s home country, while a US depositary bank issues the ADRs.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In simple terms, ADRs allow investors to access eligible foreign companies through the <strong>US stock market<\/strong> without directly buying shares on the company\u2019s home-country exchange.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They are generally traded in US dollars and may be listed on exchanges such as the <strong>NYSE or Nasdaq<\/strong>, or traded through the <strong>OTC market<\/strong>, depending on the ADR program.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Importantly, an ADR is not the foreign company\u2019s ordinary share listed directly in the US. It is a separate security representing an interest in the underlying foreign shares.<\/p>\n\n\n\n<p class=\"has-background wp-block-paragraph\" style=\"background:linear-gradient(135deg,rgb(254,205,165) 70%,rgb(254,45,45) 91%,rgb(107,0,62) 100%)\"><strong>Related Reading: <\/strong><a href=\"https:\/\/lakshmishree.com\/blog\/what-is-a-depository\/\"><strong>What is a Depository in the Stock Market?<\/strong><\/a><strong> | <\/strong><a href=\"https:\/\/lakshmishree.com\/blog\/depository-participant\/\"><strong>Depository Participant - Step-By-Step Guide<\/strong><\/a><\/p>\n\n\n\n<h2 id=\"how-does-an-adr-work-and-how-is-its-price-determined\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-30e1a2581d0dbf163100bbc9082b3323\"><strong>How Does an ADR Work and How Is Its Price Determined?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">An <strong>American Depositary Receipt (ADR)<\/strong> allows investors to trade shares of a foreign company in the US market without directly purchasing the company\u2019s shares on its home-country exchange.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The process works as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Foreign company:<\/strong> The company has shares listed and traded in its home market. These are the <strong>underlying shares<\/strong>.<\/li>\n\n\n\n<li><strong>Custodian bank:<\/strong> The underlying shares are held by a custodian bank in the company\u2019s home country.<\/li>\n\n\n\n<li><strong>US depositary bank:<\/strong> A US depositary bank issues ADRs against the underlying shares held by the custodian.<\/li>\n\n\n\n<li><strong>ADR ratio:<\/strong> Each ADR represents a specified number of underlying foreign shares. For example, one ADR may represent two underlying shares.<\/li>\n\n\n\n<li><strong>Investor:<\/strong> Investors can buy and sell the ADRs through the relevant US market.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"539\" src=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-does-an-adr-work-1024x539.jpeg\" alt=\"what is adr in stock market\" class=\"wp-image-15844\" srcset=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-does-an-adr-work-1024x539.jpeg 1024w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-does-an-adr-work-752x396.jpeg 752w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-does-an-adr-work-768x404.jpeg 768w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-does-an-adr-work-1536x808.jpeg 1536w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-does-an-adr-work-150x79.jpeg 150w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-does-an-adr-work.jpeg 1900w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The price of an ADR is linked to the value of the underlying foreign shares, but it is not necessarily a one-to-one match. <strong>ADR pricing<\/strong> is influenced by factors such as the underlying share price, ADR ratio, exchange rate, supply and demand, market conditions, and applicable depositary fees or other expenses.<\/p>\n\n\n\n<h3 id=\"adr-pricing-example\" class=\"wp-block-heading\"><strong>ADR Pricing Example<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Suppose a foreign company's share is priced at <strong>\u20b93,000<\/strong>, one ADR represents <strong>two underlying shares<\/strong>, and the USD\/INR exchange rate is <strong>\u20b985<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The approximate theoretical value of one ADR would be:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>\u20b93,000 \u00d7 2 \u00f7 \u20b985 = $70.59<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Therefore, one ADR would have a theoretical value of approximately <strong>$70.59<\/strong>, before considering fees, currency fluctuations, market conditions, and other factors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The actual ADR market price may differ from this theoretical value due to <strong>supply and demand, trading conditions, currency movements, and market sentiment<\/strong>. This is why investors should always check the <strong>ADR ratio<\/strong> before comparing an ADR's price with the price of its underlying foreign shares.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Depending on the ADR program, holders may also receive <a href=\"https:\/\/lakshmishree.com\/blog\/what-is-dividend-in-stock-market\/\"><strong>dividends<\/strong><\/a>, subject to applicable fees, taxes, and the terms of the program.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"539\" src=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-is-adr-price-determined-1024x539.jpeg\" alt=\"what is adr in stock market\" class=\"wp-image-15845\" srcset=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-is-adr-price-determined-1024x539.jpeg 1024w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-is-adr-price-determined-752x396.jpeg 752w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-is-adr-price-determined-768x404.jpeg 768w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-is-adr-price-determined-1536x808.jpeg 1536w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-is-adr-price-determined-150x79.jpeg 150w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/how-is-adr-price-determined.jpeg 1900w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 id=\"types-of-ad-rs\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-051eafa2a2bb52190a3f9f9b7040ae2b\"><strong>Types of ADRs<\/strong><\/h2>\n\n\n\n<h3 id=\"level-1-ad-rs\" class=\"wp-block-heading\"><strong>Level 1 ADRs<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Level 1 ADRs are the simplest type of ADR program.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They establish a trading presence in the US but cannot be used by the foreign company to raise capital through the ADR program. Level 1 ADRs are traded in the <strong>OTC market<\/strong> rather than on a national US stock exchange. They may also be sponsored or, uniquely among the three levels, unsponsored.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For investors, this can mean less exchange visibility and potentially lower <a href=\"https:\/\/lakshmishree.com\/blog\/liquidity-in-stock-market\/\">liquidity<\/a> than exchange-listed ADRs.<\/p>\n\n\n\n<h3 id=\"level-2-ad-rs\" class=\"wp-block-heading\"><strong>Level 2 ADRs<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Level 2 ADRs allow a foreign company to establish a presence on a US national securities exchange.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These ADRs can be listed on exchanges such as the <strong>NYSE or Nasdaq<\/strong>. They involve greater US regulatory and reporting requirements than Level 1 programs. However, they do not allow the company to raise capital through the ADR program.<\/p>\n\n\n\n<h3 id=\"level-3-ad-rs\" class=\"wp-block-heading\"><strong>Level 3 ADRs<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Level 3 ADRs provide the foreign company with a way to establish a US market presence <strong>and raise capital<\/strong> through the ADR offering.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Because of this, Level 3 programs involve more extensive registration and disclosure requirements.<\/p>\n\n\n\n<h3 id=\"sponsored-and-unsponsored-ad-rs\" class=\"wp-block-heading\"><strong>Sponsored and Unsponsored ADRs<\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">ADRs can also be classified as <strong>sponsored or unsponsored<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A <strong>sponsored ADR<\/strong> is established with the involvement of the foreign company and a depositary bank under a deposit agreement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">An <strong>unsponsored ADR<\/strong>, in contrast, can be established by a depositary institution without the direct participation of the foreign company. Level 1 is the only ADR level that can be unsponsored.<\/p>\n\n\n\n<h2 id=\"how-to-trade-ad-rs\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-7e573b0a6f83d0aea6a6986ddfcb84cf\"><strong>How to Trade ADRs?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Trading an ADR is similar to buying and selling other US-listed securities.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Open an account with a broker that provides access to US markets.<\/li>\n\n\n\n<li>Search for the ADR using its ticker symbol.<\/li>\n\n\n\n<li>Check its price, ADR ratio, trading volume and fees.<\/li>\n\n\n\n<li>Place a buy or sell order based on your investment strategy.<\/li>\n\n\n\n<li>Monitor currency movements and the performance of the underlying foreign company.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">For Indian investors, applicable overseas investment rules, taxes, currency conversion charges and brokerage fees should also be considered.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" width=\"909\" height=\"280\" src=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/07\/Free-AMC.jpeg\" alt=\"\" class=\"wp-image-15599\" srcset=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/07\/Free-AMC.jpeg 909w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/07\/Free-AMC-752x232.jpeg 752w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/07\/Free-AMC-768x237.jpeg 768w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/07\/Free-AMC-150x46.jpeg 150w\" sizes=\"(max-width: 909px) 100vw, 909px\" \/><\/figure>\n\n\n\n<h2 id=\"what-are-the-benefits-of-ad-rs\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-a9f9d5878135f691496011c2677147ab\"><strong>What Are the Benefits of ADRs?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Access to Foreign Companies:<\/strong> It allow investors to invest in eligible foreign companies through the US market.<\/li>\n\n\n\n<li><strong>Trading in US Dollars:<\/strong> It is generally traded in US dollars, making transactions easier for investors using the US market.<\/li>\n\n\n\n<li><a href=\"https:\/\/lakshmishree.com\/blog\/web-stories\/portfolio-diversification-a-beginners-guide\/\"><strong>Portfolio Diversification<\/strong><\/a><strong>:<\/strong> ADRs can help investors diversify their portfolios by adding exposure to international stocks.<\/li>\n\n\n\n<li><strong>Easier Access to International Markets:<\/strong> Investors can access certain foreign companies without directly trading on their home-country stock exchange.<\/li>\n\n\n\n<li><strong>Potential Dividend Income:<\/strong> Some ADRs pay dividends based on the underlying company's dividend policy.<\/li>\n\n\n\n<li><strong>US Market Accessibility:<\/strong> Certain ADRs are listed on major exchanges such as the <a href=\"https:\/\/www.nyse.com\/\" target=\"_blank\" rel=\"noopener\">NYSE<\/a> and Nasdaq, making them easier to access and trade.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"what-are-the-risks-of-investing-in-ad-rs\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-cdbab4ea966cd38125190572ccd7d121\"><strong>What Are the Risks of Investing in ADRs?<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Currency Risk:<\/strong> Changes in exchange rates can affect the value of an ADR and the investor's overall returns.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Market Risk:<\/strong> ADR prices can fall due to changes in the company's performance, industry conditions or broader market movements.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Political and Regulatory Risk:<\/strong> Political or regulatory changes in the foreign company's home country can affect its business and stock value.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Liquidity Risk:<\/strong> Some ADRs may have lower trading volumes, making them harder to buy or sell at the desired price.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>ADR Fees:<\/strong> Depositary banks may charge fees for maintaining the ADR program and processing certain transactions or dividends.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Delisting or Program Termination Risk:<\/strong> Changes or termination of an ADR program can affect investors and their ability to trade the security.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Tax Complexity:<\/strong> Dividends, capital gains and other tax obligations may involve rules from both the foreign country and the investor's home country.<\/p>\n\n\n\n<h2 id=\"ad-rs-for-indian-investors-what-should-you-know\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-08e3ab8ba8b5a2b1f5721d3b53e9b65e\"><strong>ADRs for Indian Investors: What Should You Know?<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"539\" src=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/ADR-for-Indian-Investors-1024x539.jpeg\" alt=\"what is adr in stock market\" class=\"wp-image-15846\" srcset=\"https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/ADR-for-Indian-Investors-1024x539.jpeg 1024w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/ADR-for-Indian-Investors-752x396.jpeg 752w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/ADR-for-Indian-Investors-768x404.jpeg 768w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/ADR-for-Indian-Investors-1536x808.jpeg 1536w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/ADR-for-Indian-Investors-150x79.jpeg 150w, https:\/\/lakshmishree.com\/blog\/wp-content\/uploads\/2026\/09\/ADR-for-Indian-Investors.jpeg 1900w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">For Indian investors, ADRs can be a way to gain exposure to eligible foreign companies through the US market. Before investing, it is important to understand how ADRs fit into the Indian investor\u2019s overall investment process.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Access to US Markets:<\/strong> Indian investors can access eligible ADRs through platforms or brokers that offer international or US-market investments.<\/li>\n\n\n\n<li><strong>Investment Limits and Regulations:<\/strong> Overseas investments from India are subject to applicable RBI and regulatory rules. Investors should check the current requirements and limits before investing.<\/li>\n\n\n\n<li><strong>Currency Conversion:<\/strong> ADRs are generally traded in US dollars. Therefore, changes in the INR-USD exchange rate can affect the value of the investment and the final returns when converted back to Indian rupees.<\/li>\n\n\n\n<li><strong>Tax on Dividends:<\/strong> Dividends received from foreign companies may be subject to withholding tax in the country where the company is based. Indian tax rules may also apply to the income received.<\/li>\n\n\n\n<li><strong>Tax on Capital Gains:<\/strong> Any gains from selling an ADR may have tax implications in India. The applicable treatment can depend on factors such as the nature and holding period of the investment.<\/li>\n\n\n\n<li><strong>Reporting Requirements:<\/strong> Foreign investments and related income may need to be reported in accordance with applicable Indian tax rules.<\/li>\n\n\n\n<li><strong>Investment Costs:<\/strong> Investors should consider brokerage charges, currency conversion costs, ADR fees and other applicable expenses, as these can affect overall returns.<\/li>\n\n\n\n<li><strong>Research the Underlying Company:<\/strong> Before investing in an ADR, Indian investors should evaluate the underlying foreign company, its financial performance, valuation and business prospects rather than focusing only on the ADR price.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Note:<\/strong> Tax and regulatory rules can change. Indian investors should verify the latest applicable requirements before making an ADR investment.<\/p>\n\n\n\n<h2 id=\"conclusion\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-921e6543a70f945f0fdcbcc625eb75b9\"><strong>Conclusion<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Understanding <strong>what is ADR in stock market<\/strong> can help investors explore international investment opportunities through the US market. ADRs provide access to eligible foreign companies and can support portfolio diversification.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, investors should consider the <strong>ADR ratio, pricing, currency movements, fees, liquidity and tax implications<\/strong> before investing. For Indian investors, checking applicable investment and tax regulations is also important. Researching the underlying company and understanding the risks can help investors make informed investment decisions.<\/p>\n\n\n\n<h2 id=\"frequently-asked-questions\" class=\"wp-block-heading has-vivid-red-color has-text-color has-link-color wp-elements-93c71607d0132220d56971aea9ea1af7\"><strong>Frequently Asked Questions<\/strong><\/h2>\n\n\n<div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-question-1788333363852\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>1. What does ADR mean in the stock market?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>ADR stands for <strong>American Depositary Receipt<\/strong>. It is a US-traded security that represents an ownership interest in shares of a foreign company.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1788333378156\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>2. Is an ADR the same as a foreign stock?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>No. An ADR is a US-traded security that represents an interest in underlying shares of a foreign company. It is not the same as directly purchasing the company's ordinary shares on its home-country exchange.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1788333389396\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>3. How does an ADR work?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>A foreign company's shares are held with a custodian in its home country. A US depositary bank then issues ADRs representing those shares. Investors can buy and sell the ADRs through the relevant US market.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1788333400468\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>4. Are ADRs risky?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Yes. ADRs can be affected by market volatility, currency movements, political and regulatory changes, liquidity issues, fees and tax considerations.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1788333416484\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>5. Do ADRs pay dividends?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Some ADRs pay dividends when the underlying foreign company distributes them. However, the amount received may be affected by applicable taxes, currency conversion and depositary fees.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1788333428484\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>6. Can Indian investors invest in ADRs?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>Eligible Indian investors may be able to invest in ADRs through platforms or brokers that provide access to international securities. Before investing, they should check the applicable overseas investment, tax, reporting and currency-related requirements.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-question-1788333454677\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><strong>7. What is the difference between ADR and ADS?<\/strong><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>An ADS represents the ownership interest in the deposited foreign shares. An ADR is the receipt or certificate evidencing that interest. In everyday investing, however, the terms are often used interchangeably.<\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\n<p class=\"has-vivid-red-color has-text-color has-link-color wp-elements-5d90caac042ec92487764d8e716a5f95 wp-block-paragraph\" id=\"6-can-indian-investors-invest-in-ad-rs\">Disclaimer: This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any specific security. Investing in stocks involves market risk. Past performance is not indicative of future results. Please conduct your own due diligence before making any investment decisions.\u00a0<br><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Investing is no longer limited to companies listed in your home country. Today, investors can explore businesses from different parts of the world and add international exposure to their portfolios. But buying foreign stocks directly may involve different exchanges, currencies, processes and found its home-country stock exchange difficult to access. This is where what is [&hellip;]<\/p>\n","protected":false},"author":8,"featured_media":15843,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[269,301],"tags":[835,836,834],"class_list":["post-15842","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-basics","category-investment-learnings","tag-adr","tag-adr-in-stock-market","tag-what-is-adr-in-stock-market"],"_links":{"self":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts\/15842","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/comments?post=15842"}],"version-history":[{"count":2,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts\/15842\/revisions"}],"predecessor-version":[{"id":15848,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/posts\/15842\/revisions\/15848"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/media\/15843"}],"wp:attachment":[{"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/media?parent=15842"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/categories?post=15842"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lakshmishree.com\/blog\/wp-json\/wp\/v2\/tags?post=15842"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}