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Why should someone prefer an ADR if he can get the ordinary share from the same stock exchange?

Yes, ADRs often have multiple ORD bundled but they also cost more (fees for the company who manages them).

Whats the point of ADR if the same marketplace offers the same stock as ORD?

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There are basically two different markets for ADRs and ordinary shares. 1) The American market, 2) the "local" market.

The following is not true for most stocks in "developed" markets. But it is often true that the American market (for ADRs) is far more liquid than the local market for ordinary shares of a developing country. For instance, there was a time when the ADRs of Telmex (Telefonos of Mexico) was the fifth most traded stock in the world, after Exxon (before its merger with Mobil), IBM, Microsoft, and A T&T, meaning that it was easy to trade with low fees on the NYSE. It was much harder and slower to buy the local shares of Telmex in Mexico, on the Mexican exchange.

Also, the accompanying currency transactions were harder to execute with the ord, because you have to settle in local currency and pay an FX commission. With the ADR, the exchange rate is "built" into the (dollar) price, and you settle in dollars.

  • Yes, but whats the point of them if you can buy ORD and ADR from the same stock? – Swizzler Jun 13 '17 at 16:17
  • @Swizzler: The ADR can be bought on an American stock exchange, often the NYSE. The ord is bought on the local exchange, often costlier and less efficient than the NYSE. Also, with the ord, you have to settle in local currency and pay an FX commission. With the ADR, the exchange rate is "built" into the (dollar) price, and you settle in dollars. They're not traded in the same "marketplace" but rather two different exchanges, unless you're the "retailer" (a large U.S bank) that deals in the ADRs. It's like saying, why does one go to Walmart instead of Macy's for similar items. – Tom Au Jun 13 '17 at 16:38
  • the stock I mention is listed as well as regular but also as ADR in the same market. Thats what confuses me. – Swizzler Jun 13 '17 at 16:57
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    @Swizzler what's the stock – dsolimano Jun 13 '17 at 23:07
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    @Swizzler - ADRs are by definition depository receipts for stocks not listed on an American exchange. Do you mean your broker offers both ADRs and ordinary shares? – D Stanley Jun 14 '17 at 13:31

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