European depositary receipt

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A European depositary receipt (EDR) represents ownership in the shares of a non-European company that trades in European financial markets. It is a European equivalent of the original American depositary receipts (ADR). The EDR is issued by a bank in Europe representing stocks traded on an exchange outside of the bank’s home country.

The stock of some non-European companies trade on European stock exchanges like London Stock Exchange through the use of EDRs. [1] EDRs enable European investors to buy shares in foreign companies without the hazards or inconveniences of cross-border and cross-currency transactions. EDRs can be issued in any currency, but euro is the most common currency for this type of security. [2] If the EDR is issued in euros, it pays dividends in euros and can be traded like the shares of European companies.

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References

  1. "BNY Mellon announces one billion depositary receipts for Vodafone". Reuters. 18 April 2013. Archived from the original on 1 March 2014.
  2. "European Depositary Receipt definition". InvestorDictionary.com. Retrieved May 21, 2014.