Difference Between ADR and GDR

Indian enterprises frequently use ADR and GDR to raise financing from the international capital market. The main distinction between ADR and GDR is that ADRs are issued while GDRs are listed on an exchange. GDR is traded on European stock exchanges, while ADR is traded on US stock exchanges. These ADRs and GDRs assist corporations in accessing international money and expanding their shareholding base, resulting in higher share valuations and value for shareholders.

Most enterprises, however, choose the GDR path since the accounting standards and other disclosures are less severe than in the United States.

What are American Depository Receipts (ADRs)?

ADRs (American Depository Receipts) are a mechanism to trade non-US stocks on the New York Stock Exchange. Indian enterprises who want to raise capital in the United States can use ADRs to accomplish so by issuing shares on the American Stock Exchange.

The issue of ADRs, on the other hand, is governed by the SEC's laws and regulations (Securities and Exchange Commission). Indian businesses will be required to keep accounting in accordance with American standards.

ADRs (American Depository Receipts) are a type of stock that allows US people to invest in non-US corporations and receive dividends in US dollars.

Without paying stamp duty, an ADR holder can readily transfer the receipt along with the underlying shares and advantages.

What are Global Depository Receipts (GDRs)?

Global Depositary Receipts (GDRs) are a type of depositary receipt. It's a form of bank certificate that works like stock in a foreign company. It is a method for a firm to obtain capital from the international market.

GDRs are issued by a depository bank located outside the company's domestic boundaries, or in other terms, GDRs are issued to inhabitants of that country by a depository bank located outside the company's domestic boundaries.

The GDR is mostly traded on the European Exchange. One of the most effective ways to raise capital from outside is to issue GDRs.
The method of producing a GDR is very similar to that of creating an ADR.

Companies can approach several countries' depository banks and reach an agreement with them.

Banks will manage all transactions between investors and the company's GDRs in exchange for the companies handling the charges involved with trading in various marketplaces.

Major Difference Between ADR and GDR

The abbreviation ADR stands for American Depository Receipt, while GDR stands for Global Depository Receipt.

ADR stands for American Depository Receipt, which is a depository receipt issued by a US depository bank in return for a set number of shares of non-US business stock that trades on the New York Stock Exchange.

GDR is a negotiable instrument issued by an international depository bank that represents the shares of a foreign corporation that is available for purchase on the international market.

Foreign corporations can trade in the US stock market through numerous bank branches using ADR. GDR, on the other hand, uses ODB's branches to assist international corporations in trading in stock markets other than the US stock market.

The ADR is issued in the United States, while the GDR is issued in Europe.

ADRs are traded on the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ) (NASDAQ). GDR, on the other hand, is traded on non-US stock exchanges such as the London Stock Exchange and the Luxembourg Stock Exchange.

ADR can only be negotiated in the United States, but GDR can be negotiated everywhere in the globe. When it comes to the market, the ADR market is a retail investor market where a big number of investors participate and the stock of a firm is properly valued.

Unlike the GDR, where the market is more institutionalised and there is less liquidity.

Comparison Table Between ADR and GDR

 

ADR and GDR
Parameter of Comparison	ADR	GDR
Currencies	US Dollar	Euro
Access	Companies listed in NYSE	Companies listed in LSE and Euronext(France)
Market	Retail Investor Market	Institutional Market
Liability	Legally more complicated	Less as compared to ADR
Cost	High	Low
Stocks examples	ICICI Bank ADR Wipro ADR Infosys ADR	Ambuja Cements Apollo Hospitals Axis Bank - 144A