European Depositary Receipts (EDRs)

European Depositary Receipts (EDRs) are financial instruments that represent shares of a non-European company traded on European stock exchanges. EDRs enable investors in Europe to invest in foreign companies without dealing with the complexities of cross-border trading and currency conversion. Each EDR corresponds to a specific number of shares of the underlying foreign company, and they are issued by banks that hold the original shares in custody.

Example

A European investor can buy EDRs of a U.S. technology company, gaining exposure to its stock without trading directly on a U.S. exchange.