Benefits of IDRs

♤ To companies- They lead to increased access to capital, are a means of increasing global visibility and trade, allow increased liquidity and global benchmark valuation and an international shareholder base

♤ To investors- They allow global investing opportunities without the risk of investing in unfamiliar markets, ensure more information and transparency and improve the breadth and depth of the market.

14.4. Difference between IDRs, ADRs and GDRs

♤ GDRs and ADRs are amongst the most common DRs. When the depository bank creating the depository receipt is in the US, the instruments are known as ADRs.

♤ Similarly, other depository receipts, based on the location of the depository bank creating them, have come into existence, such as the GDR, the European Depository Receipts, International Depository Receipts, etc.

♤ ADRs are traded on stock exchanges in the US, such as Nasdaq and NYSE, while GDRs are traded on the European exchanges, such as the London Stock Exchange.

♤ Both ADRs and GDRs are usually denominated in US dollars, but can also be denominated in Euros.