ADS

(AutoCAD Development System) A facility that allows C routines to be run from within AutoCAD.

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share issued under a deposit agreement representing the underlying ordinary share which trades in the issuer’s home market. The terms ADS and ADR tend to be used interchangeably. Technically, the ADS is the instrument that actually is traded, while the ADR is the certificate that represents a number of ADSs.

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A U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange. American Depositary Shares (ADSs) are issued by depository banks in the U.S. under agreement with the issuing foreign company; the entire issuance is called an American Depositary Receipt (ADR) and the individual shares are referred to as ADSs.

Depending on the level of compliance with U.S. securities regulations the foreign company wishes to follow, the company may either list its shares over-the-counter (OTC) with low reporting requirements or on a major exchange like the NYSE or Nasdaq. Listings on the latter exchanges generally require the same level of reporting as domestic companies, and also require adherence to GAAP accounting rules.

Investopedia Says:
Foreign companies that choose to offer shares on U.S. exchanges gain the advantage of a wider investor base, which can also lower costs of future capital. For U.S. investors, ADSs offer the opportunity to invest in foreign companies without dealing with currency conversions and other cross-border administrative hoops.

Even though ADSs represent real claims to foreign shares (and could be converted if the investor wished to do so), there is currency risk involved in holding them. Fluctuations in the currency exchange rate between the USD and the foreign currency will affect the price of shares as well as any income payments, which must be converted into U.S. dollars.

Related Links:
Thanks to American depositary receipts, investors now have a world of investing opportunities to choose from. American Depositary Receipt Basics
Learn about a security that allows you to invest in a foreign company through your local exchange. What Are Depositary Receipts?

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