GDR or Global Depositary Receipt

A GDR or Global Depositary Receipt is essentially a certificate issued by a bank that represents ownership of a share or a fixed number of shares in a company. Companies that are listed on one stock exchange can ask a bank to issue them to investors on another exchange, where they can be traded, as a cheaper alternative to getting a full listing on that exchange. “GDR” tends to refer to issues on a non-US exchange. An issue on an American exchange is called an ADR or American Depositary Receipt.

Remember that a GDR / ADR can represent more than one share. Also, if you buy a GDR / ADR you may have credit exposure to the issuing bank.

The issuing bank controls the supply of these by creating and cancelling them.

An equivalent instrument, often used in Emerging markets equity investing is the Participation or P-Note, which “participates in the performance of a share of a company on a market that the Investment manager can not access.