A Depository Receipt (DR) is a negotiable financial instrument that allows investors to hold shares of a foreign company in their domestic market. It represents ownership in a foreign company's equity that is held by a depository bank. These receipts simplify global investing by enabling investors to trade foreign stocks without dealing with foreign exchanges directly.

There are two main types: American Depository Receipts (ADRs) traded on U.S. exchanges and Global Depository Receipts (GDRs) traded in international markets, usually in Europe or Asia. Each DR corresponds to one or more underlying shares held by a custodian bank in the issuing companyís home country.

Key Advantages:

• Global Accessibility: Investors can easily invest in foreign companies.
• Simplified Trading: DRs are traded in local currency, reducing forex complexities.
• Capital Raising Tool: Companies can access international capital markets.
• Dividend Benefits: Investors receive dividends in their domestic currency.

For example, if an Indian company issues GDRs listed on the London Stock Exchange, global investors can buy them just like local stocks. Meanwhile, the company benefits from diversified funding sources and global visibility.

In summary, Depository Receipts serve as a bridge between domestic and international markets, facilitating cross-border investments and expanding opportunities for both investors and corporations worldwide.