I am curious how an ADR is tied to the value of its underlying stock, specifically with RYCEY.

I have a few closely related questions.

I am ignoring forex issues in the following. The exchange rate fluctuates, of course, but in the following the rate varied from about 0.742-0.750 during the day, so I am treating it as more or less constant.

(I'm not sure how to scale the graphs, excuse their size.)

  1. The ADR ratio is listed as 1:1, however if I look up RYCEY and RR:LON there seems to be a 100:1 ratio. What am I missing?

  2. I would expect that the ratio between RYCEY and RR:LON to be roughly 1:1 (or 100:1 as seems to be the case). However, there does not appear to be such a relationship below. What am I missing?

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  1. What mechanism is supposed to make the ADR track the underlying stock?
  • 1
    UK stock quotes are usually in pence (1/100 of a pound).
    – Flux
    Dec 10, 2020 at 7:42
  • @Flux Thanks, I should have known, I grew up with pounds, shillings & pence (used to be written LSD, different meaning now).
    – copper.hat
    Dec 10, 2020 at 16:19

1 Answer 1


What mechanism is supposed to make the ADR track the underlying stock?

Arbitrage. It is possible to convert the ADR to the underlying, and to convert the underlying to the ADR. There are fees involved for depositing and withdrawing the underlying stock. There may also be some delay between the deposit/withdrawal request and the time the shares are received. These two reasons could explain why the ADR price does not precisely track the underlying stock's price.

You can get the details in the Deposit Agreement in the ADR's Form F-6 filing.

  • Thanks, I understood that, but the mechanism seems rather slow in a microsecond trading era. I would have expected at least a forex like speed. Certainly would explain the discrepancies.
    – copper.hat
    Dec 10, 2020 at 16:24

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