A Depositary Receipt (DR) is a security that represents ownership of shares (usually) in a company that is foreign to the market on which the DR trades. Depositary receipts overseas companies to raise capital in the US or other developed equity markets, and allow investors in those markers to invest in international stocks without having to purchase ordinary shares. Ordinary shares are shares of a given foreign company trading in the company's domestic market. Depositary receipts are most often issued to represent ownership of a foreign common equity, but can also be issued to represent ownership of preferred stock, debt or warrants.
It follows that an American Depositary Receipt (ADR) is a security that is denominated and pays dividends in US dollars, even though the security represents ownership of shares in a non-US corporation. An ADR is a negotiable certificate issued by an non-US company, listed on one or more US exchanges, raising funds in the US market. (Companies like Ericsson, Nokia, and similar). It is a physical certificate that can represent a specified number of American Depositary Shares. The number is given by the depositary ratio (DR).
ADRs are traded on the NYSE, NASDAQ and AMEX, or traded over the counter like regular shares of stock. Over 2,000 non-American companies from over 70 countries are traded in the US through ADRs. ADRs therefore enable British investors get exposure through US stock exchanges to a large number of continental and emerging market companies, while at the same time gaining the benefits of protections and transparency offered by US securities regulations. You can read more about investing in the US Market here.
A global depository receipt (GDR) is a certificate issued by a depository bank, which purchases shares of foreign companies and deposits it on the account. They are the global equivalent of the original American depository receipts (ADR) on which they are based.
Several international banks issue GDRs, such as JPMorgan Chase, Citigroup, Deutsche Bank, The Bank of New York Mellon. GDRs are often listed in the Frankfurt Stock Exchange, Luxembourg Stock Exchange, and the London Stock Exchange, where they are traded on the International Order Book (IOB).