Deposit receipt
A depository receipt (also escrow certificate ; English depositary receipt , DR ) is a certificate that the deposit of the right to a share (or a fraction or multiple thereof) securitized .
backgrounds
In order to make a share tradable abroad without having to admit it there, depository receipts are issued as certificates. Investment banks usually act as intermediary trading partners. While in the home country of a listed corporation bought by the Bank 's shares at a custodian bank are stored are abroad by the bank depository receipts under the respective country emits .
The buyer of a depository receipt thus acquires the right to be able to exchange the depository receipt for the corresponding number of deposited shares at any time.
Advantages and disadvantages
The investor does not expect any legal disadvantages: In principle, holders are even allowed to request the surrender of the deposited shares, which, however, does not apply in practice. The dividend payments and the right to vote at shareholders' meetings are also granted to the investor. Another plus point is that there is no issuer risk - ie the owner of the certificates does not go away empty-handed, even if the issuing bank becomes insolvent. The blocked deposit represents a special fund that remains protected in the event of insolvency.
In most cases, however, it remains unclear to what extent the securitized securities are actually deposited in the custody account of the issuing bank, or with which derivative financial instruments the depository receipt is replicated or secured.
In some cases, depository receipts have very little liquidity , which can lead to relatively large spreads and the associated high transaction costs for the investor.
history
Since American investors were and are often not allowed to invest in shares of foreign companies due to restrictions due to laws or their own statutes , the first American depositary receipts (ADR) were developed as an elegant detour to overcome these hurdles as early as 1927 . With the approval of the depository receipts in the respective foreign country, the foreign base value essentially becomes a domestic security , in which investors with the aforementioned restrictions can then also invest.
Global Depositary Receipts (GDRs) and European Depositary Receipts (EDRs) were later developed following this system .
In addition to the statutory and legal restrictions, the high financial expenses required for the admission of shares (e.g. securities prospectuses ) are among the reasons why companies prefer to use depository receipts over direct placement of their own shares for trading abroad.
species
Common types of depository receipts are:
Individual evidence
- ↑ http://www.dai.de/internet/dai/dai-2-0.nsf/LookupDL/D21B7203441E0D96C1256D8F005F4B65/$File/2000-11-08_Positions_Osteuropa_D.pdf ( page no longer available , search in web archives ) Info: Der Link was automatically marked as broken. Please check the link according to the instructions and then remove this notice.
- ↑ Correction - Foreign Stocks: The Risks of ADRs. Retrieved on February 10, 2020 (German).
- ↑ Depositary Receipt. In: Wertpapierdepot.net. Retrieved on February 10, 2020 (German).
