Expert Chaslau Koniukh
  • Companies
  • Global investment
  • Investors
  • Terminology
  • Economy
  • Stock Market
  • World exchanges
  • Tech and Marketing
types of depository receipts
Market terminology

Types of depositary receipts: overview of instruments for acquiring shares

11.08.2021
2 min read

What types of depositary receipts are used for the Russian market

Diversification is one of the important approaches in investor activity. It is used between assets, and afterwards it is switched to inter-industry. Some specialists also use diversification between countries, but it has a number of difficulties related to accessing the foreign market. Various types of depositary receipts have been introduced to facilitate transactions.
This paper is a financial instrument, which makes it possible to buy shares of foreign companies on the stock exchange of one’s own country. Most often, the issue of depositary receipts is engaged in large investment banks, and the latter must own the securities of the company for which the issue is made.
This type of securities became a way out of the situation when firms in one country are forbidden to place their shares on foreign stock exchanges. In order to get a receipt, one must submit an application to the broker through whom the purchase will be made. As the value of the stock increases, so does the price of the receipt.
There are different types of depositary receipts, but for Russian investors three main groups are important – American, global and Russian.
The first type, ADRs, are used for US exchanges and cover shares of issuers from other countries. The securities are denominated in dollars. Shares of Russian companies are not popular on the American floors, there are only two receipts – for MTS and Mechel.
Global Depositary Receipts or GDRs are instruments for companies whose shares are listed on several exchanges simultaneously, not including the US exchanges.
Russian depositary receipts or RDRs are issued for securities of foreign companies, which are presented on the local stock market. However, they are not popular in the country, first of all, due to the fact that the segment is underdeveloped. The number of investors on the stock exchanges is rather small, and the Russian market is not interesting for foreign companies.

types of depository receipts

Dividends are paid for shares that are purchased with depositary receipts. The instrument can be issued for a different number of securities.
It should be noted that the price of a receipt may be different from the price of a share on the stock exchange. This is due to the fact that investors from different countries perceive the same information, taking into account the individual peculiarities of their markets or the political situation in the country.
Using depository receipts has a number of advantages, first of all it is an opportunity to earn on the difference in price. Besides, if there are several accounts, it is possible to choose, on which exchange assets are cheaper to buy.
In total, more than a thousand receipts operate in the global market, 68 of them are issued for Russian companies, which are represented on foreign exchanges.

Tags: Market terminology
0
Previous Post Iraqi authorities offer foreign companies to join gas field development Next Post Analysts: how the coronacrisis has changed the positions of major currencies

You Might Also Like

free margin
Market terminology
Free margin: which concepts are associated with the instrument
03.04.2021
fractal
Market terminology
Fractal pattern and its peculiarities for trading
16.03.2024
blue chips
Market terminology
Blue chips: what criteria companies use to get this status
07.05.2023
swing trading
Market terminology
Swing trading: essence of the strategy and its benefits
24.03.2021
volatility index
Market terminology
What is the volatility index?
05.10.2020
the Morning Star pattern-2
Market terminology
How the Morning Star pattern is formed
23.08.2024

Popular Posts

  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses
  • Ingeborg Mootz: a woman who became a stock player at the age of 75
  • Analysts: Egypt’s economy to continue falling in 2023

Editor's Picks

Chaslau Koniukh
Analytics

American bankers from JPMorgan and Goldman Sachs advise to invest in gold: review by Chaslau Koniukh.

Spokesperson
17.08.2020
Expert Chaslau Koniukh
Analytics

Chaslau Koniukh on the analysts’ opinion on the key stake size change soon

Spokesperson
18.06.2020
expert Chaslau Koniukh
Analytics

Chaslau Koniukh: Internet trade market in Russia may reach 2.78 trillion rubles.

Spokesperson
30.05.2020
Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh
Analytics

Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh

Spokesperson
16.05.2020

Popular Posts

  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Field of activity of the American Monsanto Company Corporation
  • Spain’s economy performs best in the EU
  • Li Ka Shing: How can success be achieved without money and education?
  • Skolkovo analysts: the Russian energy market is suffering losses
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram

© 2024 CHASLAU KONIUKH. ALL RIGHTS RESERVED. Expert in marketing and project management, international investments, financial analyst.

Menu

  • Biography
  • Companies and corporations
  • Global investment
  • Investors and Entrepreneurs
  • Economy
  • Market terminology
  • Stock Market
  • World exchanges
  • Tech and Marketing
  • Analytics