My brokerage charges me a fee to hold ADRs; this fee is deducted anytime the ADRs pay dividends. I'm told that this is a standard fee and could not be negotiated.

Is this fee truly carved in stone, or do some brokerages charge different fees (or none at all) to hold ADRs?


Just to clarify, this is not the foreign tax on dividends, but the custodian fee. I've found some more information at http://www.schwab.com/public/schwab/nn/m/q207/adr.html:

If you are an ADR investor, you may already know that banks that custody ADRs (ADR agents) are allowed to charge custody fees. The amount and timing of custody fees are detailed in your ADR prospectus.

In the past, ADR agents could collect custody fees only when they were able to subtract them from ADR dividends. Since many ADRs do not pay regular dividends, agents were often unable to collect their fees.

Last year, the Depository Trust Company (DTC) received SEC approval to start collecting custody fees on behalf of ADR agents for ADRs that do not pay periodic dividends.

What I'm unclear about is whether this fee varies among brokerages, and to what extent it may be negotiable.


That's not a fee, it's the tax you pay the ADR's country of origin. This money does not go to your broker.

You can reclaim this when you file your taxes by filling out Form 1116, provided you've been holding the ADR in a taxable account. (This is to avoid double taxation, one by the ADR's country of origin and one by United States)

For tax-deferred accounts, you don't have a recourse.

  • Thanks! Just to clarify, I get charged both foreign taxes (on dividends) and a fee to hold the ADR -- on my statement, it appears as a "late settlement charge" – Tony the Pony Jul 3 '11 at 18:28
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    I see what you mean. These are DTC fees that are passed on to you and from how it is worded 'pass-through fees', atleast Schwab is not taking a cut and passing on these fees to directly to you. I don't believe these are negotiable. – MoneyCone Jul 4 '11 at 1:55

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