Ways to invest in Foreign Stocks from your Home country (ADRs, GDRs, EDRs)
- Buy locally listed international companies
- CDIs (CREST Depository Interest)
- ADRs (American Depositary Receipts) – listed in US
- GDRs (Global Depositary Receipts) – listed in London or Luxembourg
- EDRs (European Depositary Receipt) – issuing bank is European
- Use a local broker that allows you to buy some foreign shares
- Either by buying foreign shares directly (better if possible)
- Or through a market maker (higher fees but more countries on offer)
- Open an account abroad with an international broker to buy foreign stocks (more markets and lower costs)
- You may need to send documents certified by a lawyer or notary to open it by post.
- In some countries you need to register with the Local Securities Registry that keeps track of the owners of shares, e.g. Singapore or Malasya.
- You need to be careful of the charges when funding your international account. It’s usually better to use an FX currency company.
- In some countries, like Singapore, opening an offshore bank account is quite straightforward, so it might be useful to have it done; although usually with a brokerage account is enough to invest.
Depositary receipts are certificate issued by a bank that gives the owner rights over the foreign share. For each DR, the issuing bank holds the equivalent number of foreign shares on behalf of the owners of the DR. These DR can be bundled or split in a number of shares to price them accordingly to the market where they’re offered.
The depositary bank that holds the DR and does all the paperwork can charge a fee which is usually:
US$ 0.01-0.03 per share per year
DRs can be Supported or Unsupported by the company, so if they’re unsupported you need to be careful as they might be highly illiquid and they won’t have official backing from the company. The unsupported DRs could be suddenly withdrawn and you might be charged a large administration fee.
If you don’t feel is safe to invest in DRs, you can always try and buy the shares directly on their domestic exchange.
Find Depositary Receipts where to invest
- London Exchange – International Companies
- BNY Mellon DR directory (no US companies)
- JPMorgan DR Search (no US companies)
- DR: exchange, ISIN, Currency
- Underlying: exchange, ISIN, Currency
- DR type (ADR, GDR)
- Ratio (DR:Ord_Shares)
- Depositary (just one): JPMorgan, BNY Mellon, Citi, Deutsche Bank
- Custodian: Large Bank (& several depositories in the lists)
- iDealing list of investable stocks, with their symbol and description
- Further ADR lists and downloadable XLS files
If you see DRs with the word ‘144-A’ on them, that means they’ll just be tradable by institutions, not retail investors.
Find Company information
For example, if you want to find the annual reports of Nintendo (although they’ll be in Japanese!) or the markets where you can find the security or its Depositary Receipts:
Invest internationally via an ISA
We’ll just be able to invest in stock exchanges that are recognized by HMRC, hence we don’t be able to invest in the stocks that trade in a non-recognized stock market (even if we try to invest in that stock via an ADR or ETF that trades in a recognizable market). You can find a couple of lists with the allowed stock markets by the HMRC in the following links: