Definition of "American Depository Receipt (ADR)"

A negotiable security that represents a receipt for a number of shares of stock of a foreign-based corporation. The receipts are issued by a foreign branch of a large commercial U.S. bank. The foreign shares are held by a custodian, generally a bank in the home country of the issuer. The ADR's are traded in U.S. securities markets making the ownership of foreign securities more accessible.

Receipt for shares of a foreign-based corporation held by a US banking institution. ADRs are created to facilitate transactions and transfers of ownership of foreign securities in the United States.