ADR

ADRs enable US investors to invest in foreign companies without dealing with foreign exchanges, currencies, or settlement systems. A US depositary bank holds the underlying foreign shares and issues ADRs representing those shares, which trade on US exchanges in US dollars. ADRs can be sponsored (with company cooperation) or unsponsored (created by depositary banks). They come in different levels with varying regulatory requirements - Level I trade over-the-counter, Level II and III trade on major exchanges with increasingly stringent SEC reporting. ADRs provide foreign companies access to US capital markets while offering US investors diversification opportunities with familiar trading mechanisms and regulatory protections.