九久科技

According to the relevant securities laws of the United States, companies listed in the United States must be registered in the United States. The companies registered in China, such as Alibaba and Baidu, can only use depositary receipts to enter the US capital market. In addition, some institutional investors in the United States cannot purchase foreign stocks, such as American retirement funds and insurance companies. However, they can purchase American Depositary Receipts (ADR) that are listed in the United States and registered with the US Securities and Exchange Commission.

An ADR represents certain shares in an enterprise outside the United States. ADRs are bought and sold in the US market, and the trading procedures are the same as trading ordinary US stocks. ADRs are issued by US Bank , and each AD contains a number of shares entrusted by a foreign custodian to an enterprise outside the United States. The enterprise must provide financial information to the banks that issue it on behalf of it.

ADRs can be listed on the New York Stock Exchange, American Stock Exchange or NASDAQ.

United State investors instruct brokers to purchase depositary receipts. Brokers can purchase existing ADRs or require depositary banks to issue new ADRs. 
If a new ADR is issued, a US broker needs to contact a non-US broker to purchase shares in the non-US market and deposit it with a non-US custodian bank. The custodian bank instructs the American depositary bank to issue an ADR, indicating that the stock was received. The depositary bank issues the ADR and provides it to the broker who originally made the transaction. The broker then pass the ADR to the custody trust company of the investor.