Understanding ADRs – Starting Friday, Singapore investors can trade American Depository Receipts, or ADRs, on the Singapore Exchange (SGX) during local hours. The ADRs were first introduced in the US to facilitate American investors to buy and trade shares of foreign companies that were not listed locally. Typically, an investment bank would purchase a bulk lot of shares either from the company or the market, re‐bundle them and issue them on the US stock exchanges. ADRs are eligible for dividends, though they carry no voting rights. The initial 19 ADRs to be quoted on SGX will be fully fungible with their counterparts on NASDAQ within 24 hours, making this a 24‐hour continuous trading platform. The ADRs will be quoted in 10 shares per lot and denominated in US$. With SGX hoping that such trades will take off in a big way, investors may be rewarded for venturing into uncharted waters to meet the first wave of excitement sweeping up.
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