Glossary term
American Depositary Receipt (ADR)
A US-listed certificate representing shares of a foreign company, letting US investors trade foreign stocks on a US exchange, in dollars, without opening a brokerage account abroad.
Definition & Mechanics
An ADR is issued by a US depositary bank holding the underlying foreign shares in custody; the certificate that trades on a US exchange represents a fixed ratio of those underlying shares — often 1:1, sometimes a fraction or a multiple. Each SK Hynix ADR (Nasdaq: SKHY, listed July 2026) represents one-tenth of a Seoul-listed common share, for example. ADRs come in sponsored form, where the foreign company works directly with a depositary bank, sets the ratio, and typically pursues a full exchange listing with attendant disclosure obligations — versus unsponsored ADRs, created by a bank without the company's direct involvement and usually trading over-the-counter with lighter reporting.
Why Companies List ADRs
A US listing opens access to the deepest pool of institutional and retail capital globally, can qualify a stock for US index inclusion, and often signals a governance and disclosure commitment beyond the home-market baseline. SK Hynix's $26.5 billion ADR offering passed Alibaba's 2014 debut of $25 billion to become the largest US listing by a foreign company — a scale event for a stock whose Seoul shares had traded at a persistent Korea Discount to global memory peers.
What Closelook Watches
Beyond the listing headline, we watch the ratio, the pricing premium or discount to the home-market close, and whether the ADR's US trading volume and multiple begin to converge with or diverge from the underlying share's home-market pricing over time.