Stay on top of global markets with American Depositary Receipts (ADRs)

Understanding ADRs.

Many non-U.S. companies, that would otherwise be unavailable or inconvenient to trade, do trade in the U.S. markets as ADRs (receipts for shares of the foreign stock issued by U.S. banks). They are denominated in U.S. dollars and pay dividends in U.S. dollars. 

American depositary receipts (ADRs) are negotiable securities issued by a bank that represent shares in a non-U.S. company. These can trade in the U.S. both on national exchanges and in the over-the-counter (OTC) market, are listed in U.S. dollars, and generally represent a number of non-U.S. shares to one ADR. This gives investors exposure to non-U.S. equities without having to trade on a local exchange in the local currency. Investors can trade ADRs during the U.S. market sessions. 

ADRs can be issued as unsponsored without any involvement or approval by the foreign company or they can be issued as sponsored, where the underlying foreign company participates in the issuance of the ADR and also retains a controlling relationship. Only sponsored ADRs may be listed on a national exchange in the U.S. and they must meet certain qualifications, otherwise they trade in the U.S. OTC market. Unsponsored ADRs only trade in the U.S. OTC market.

Country flags Country flags Country flags

Know the benefits and risks of ADRs.

  • Benefits

    • The issuing financial institution will collect any dividend payments and convert them into U.S. dollars for you.
    • ADRs listed on an exchange must file quarterly results because they are registered with the U.S. Securities and Exchange Commission and are subject to U.S. accounting rules. This means investors potentially have access to more information than they would if they’d invested directly overseas.
    • Depending on country and account type, applicable dividend withholding tax percentages may be lower than those applied to foreign ordinary shares. 
    • There are some listed ADRs that are marginable and may have options.
       
  • Risks

    • The institutions that issue ADRs may charge quarterly or annual 'ADR Pass-Through Fees' which consist of custody fees and fees for processing dividends and corporate actions. These fees can add to your investment costs.
    • Liquidity for some ADRs may be low, which may affect bid/ask spreads. Also, not every non-U.S. company has an ADR.
    • While a rare occurrence, the bank offering the ADR may decide to terminate the ADR program for any number of reasons, including lack of interest. This could result in a requirement that the position either be liquidated or converted to the underlying foreign ordinary shares.

Why invest in ADRs with Schwab?

  • US$0 online equity commissions¹

    Get commission-free online trades plus low per-contract fees for ADRs and Canadian stocks.

  • Intuitive platforms

    Trade ADRs using our advanced platforms and powerful tools. 

  • Trading specialists

    Get real-time trade analysis and focused support from trading specialists with extensive knowledge in the global markets.

  • Premium research

    Easily find ideas with Schwab Equity Ratings International, global market commentary, and more.

Considerations when investing in ADRs.

Considerations when investing in ADRs.
  • American Depositary Receipts (ADRs) & Canadian stocks
  • Liquidity* 
  • American Depositary Receipts (ADRs) & Canadian stocks
    Varies by ADR
  • Minimum position size
  • American Depositary Receipts (ADRs) & Canadian stocks
    None
  • Trading hours
  • American Depositary Receipts (ADRs) & Canadian stocks
    U.S. market hours
  • Currency exposure
  • American Depositary Receipts (ADRs) & Canadian stocks
    Yes
  • Settlement date
  • American Depositary Receipts (ADRs) & Canadian stocks
    Trade date plus two days (T+2)2
  • Online trading 
  • American Depositary Receipts (ADRs) & Canadian stocks
    Yes
  • Ongoing management expenses
  • American Depositary Receipts (ADRs) & Canadian stocks
    ADRs have custody fees that are levied on a regular basis, such as annually or quarterly
  • Commission at Schwab
  • American Depositary Receipts (ADRs) & Canadian stocks
    US$0 online trades1

    Automated phone:
    US$5

    Broker-Assisted:
    US$25 

Source: Schwab Center for Financial Research.

View important disclosures about this table

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