Question

Distinguish between GDR and ADR.

Answer 1

Sl.No	Basis of Difference	GDR	ADR
1.	Denomination	It is denomi­nated in terms of any freely convertible currency	It is denominat­ed only in US dollars
2.	To whom it is issued	It is issued to investors in one or across more markets simul­taneously	It is issued only to investors, who are res­idents of the United States of America
3.	Listed in	Non-US Stock Exchange such as London Stock Exchange or Luxemburg Stock Exchange	American stock exchange
4.	Approval	Issue of GDR does not require foreign regula­tory clearances	Issue of ADR requires approval from the Securities Exchange Com­mission (SEC) of the United States of America.
5.	Mode of ex­pression	GDRs are normally correlated to equity shares of the issuing compa­ny expressed in whole numbers.	In many cases, ADRs co-re­lated to equity shares of the company are expressed as a fraction
6.	Negotiation	It is negotiable all over the World	It is negotiable only in Amer­ica.