How ADR Depositary Banks and Listings Are Determined
Summary
An American depositary receipt is tied to the bank that issues or sponsors that particular ADR program. More than one bank can create an ADR program for the same foreign company, so the programs represent distinct securities and may use different US tickers. The ticker is given as a practical way to identify the depositary, illustrated by two US listings for the Japanese company Daikin, each associated with a different bank.
The document also describes custody arrangements: a depositary bank with a presence in the company’s home market may serve as custodian, while a bank without local presence must arrange custody through another institution. That arrangement can add fees and make the ADR less attractive. The discussion is qualitative and relies on a specific example; it does not establish that one listing always dominates in liquidity or explain how orders route across exchanges. Investors should check the details of the individual ADR program rather than assume all receipts for an issuer share one book or custodian.
Key ideas
- Multiple depositary banks can sponsor separate ADR programs for the same foreign company.
- Separate programs may have distinct tickers and represent different securities.
- The ticker can help identify the depositary bank associated with an ADR.
- A bank without a local presence may need to hire a local custodian, adding costs.
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# When buying an ADR, how is the depositary for the purchased ADR determined? # When buying an ADR, how is the depositary for the purchased ADR determined? I'd imagine that for a given underlying foreign security, it's possible for there to be multiple U.S.-based banks, each of which acts as a custodian/depositary for ADRs of that foreign security. In which case, when you buy an ADR, does the ADR you buy have a particular custodian associated with it? And are ADRs with the same underlying security all traded via the same book even if they have different custodians? ## Answer by Alex C (score 1) https://quant.stackexchange.com/a/39276 Yes, it is possible for more than one bank to decide to sponsor an ADR on the same security. In this case the ADRs have different tickers and are conceptually different securities. An example is the Japanese company Daikin (Tokyo 6367) which trades in US as both DKILY and DKILF (the latter is much less traded however, typically one ADR prevails over the other in the marketplace, in tems of liqidity). DKILY is with Citibank, DKILF is with Bank of New York Mellon. So that is how you know who the custodian is, from the ticker. ## Answer by chjortlund (score 0) https://quant.stackexchange.com/a/40338 ADRs can be issued by any depository bank and if there's demand multiple banks can issue an ADR on the same company. In case of the multinational banks like BAML, CITY, BNYM, WFC, DB they are usually also the custodian as they have a presence in the home market of the underlying security. In case of no presence in the home market of the underlying security, they have to arrange for a custodian. This however adds a higher fee burden, making the ADR less attractive for investors, hence not very often done. Also have a look at the SEC, Investor Bulletin: American Depositary Receipts
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