Global Depositary Receipt (GDR)

A global depository receipt (GDR) is a certificate of ownership in stocks which can be traded without actually trading the underlying stocks. The underlying stocks are generally held by a broker, which then issues GDRs which can be purchased by investors, giving them a share in the underlying stocks held by the broker.

Because stocks do not actually change hands in GDR-based trading, GDRs present an efficient and cost-effective means of investing in foreign stocks.

More on this topic:
Stocks explained
ETFs explained
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Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.