science

Global depository receipt

Global depository receipt is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Global depository receipt rather than just read about it. In short: A global depository receipt (GDR and sometimes spelled depositary) is a general name for a depositary receipt where a certificate issued by a depository bank, which purchases shares of foreign companies, creates a security on a local exchange backed by those shares. They are the global equivalent of the original American depositary receipts (ADR) on which they are based.

Key takeaways

Global depository receipt belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Global depository receipt to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Global depository receipt from memory before moving on to harder problems.

Reference excerpt

A global depository receipt (GDR and sometimes spelled depositary) is a general name for a depositary receipt where a certificate issued by a depository bank, which purchases shares of foreign companies, creates a security on a local exchange backed by those shares. They are the global equivalent of the original American depositary receipts (ADR) on which they are based. GDRs represent ownership of an underlying number of shares of a foreign company and are commonly used to invest in companies from developing or emerging markets by investors in developed markets. Prices of global depositary receipt are based on the values of related shares, but they are traded and settled independently of the underlying share. Typically, 1 GDR is equal to 10 underlying shares, but any ratio can be used. It is a negotiable instrument which is denominated in some freely convertible currency. GDRs enable a company, the issuer, to access investors in capital markets outside of its home country. Several international banks issue GDRs, such as JPMorgan Chase, Citigroup, Deutsche Bank, and The Bank of New York Mellon. GDRs are often listed in the Frankfurt Stock Exchange, Luxembourg Stock Exchange, and the London Stock Exchange, where they are traded on the International Order Book (IOB).

Characteristics It is an unsecured security It may be converted into number of shares Interest and redemption price is public in foreign agency It is listed and traded on the stock exchange Holders of a GDR do not carry any voting rights

Usage If for example an Indian company which has issued ADRs in the American market wishes to further extend it to other developed and advanced countries such as in Europe, then they can sell these ADRs to the public of Europe and the same would be named as GDR. GDR can be issued in more than one country and can be denominated in any freely convertible currency.

See also American Depositary Receipt European depositary receipt Indian Depository Receipt Cross listing

References

External links Deutsche Bank's depositary receipt website Global depository receipts BNY Mellon ADRs Frankfurt Stock Exchange

Worked examples

Example 1 — a first encounter with Global depository receipt

Start with the simplest possible case. Write down what Global depository receipt claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Global depository receipt before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Global depository receipt ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Global depository receipt

In research: Global depository receipt appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Global depository receipt in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Global depository receipt is common in secondary-school and first-year university syllabi. It links to neighbouring topics Banking, Depositary receipts, Finance stubs, so understanding it makes those chapters shorter.
In everyday life: Look for Global depository receipt outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Global depository receipt in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Global depository receipt means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Global depository receipt out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Global depository receipt in simple terms?

Why does Global depository receipt matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Global depository receipt?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Global depository receipt.