Very newbie question about shares.

TexMurphy

Hi there, and thanks in advance for your patience with a newbie.

I've looked a little at BP over the past few days, and I've noticed that on the NYSE there is BP (ADR), which I guess is different. Does the share on the NYSE directly affect the share on the FTSE? What's the difference?

I did Google the difference, but it didn't give me anything like an answer.

JustJewels

Big companies like BP can list shares on more than one stock exchange. It's called cross listing. ADR stands for American Deposit Receipt and just means that Americans can buy shares in BP without all the hassle of having to have a UK share account, which means changing US dollars into sterling, having a UK bank account, all that palaver.

The price of an ADR usually tracks the price of the stock in its home exchange ie London Stock Exchange E in BP's case.

...If the price was different, then that would create an opportunity for arbitrage - i.e (simplistically) buy stocks in London, sell them higher in
New York for instant profit...so that is why price tracks LSE share price.

Hope that helps

JJ

turbobob

It's not really a newbie question because I'm not sure why a typical UK investor would buy ADR's in a British based company ADR's are American Depositary Receipts. They mainly exist to make it convenient for US investors to invest in foreign companies. Wiki gives quite a good description - http://en.wikipedia.org/wiki/American_Depositary_Receipt

JustJewels

Turbobo,

With a name like TexMurphy, how can you be sure the OP is a UK investor? Could be a newbie US investor who just stumbled upon MSE by accident, and thought, hey, those Brits might be able to answer my question re BP!

Is there an equivalent consumer advocate/education site to MSE in the States?




JJ

turbobob

I assumed from the language of the post the OP was UK based, but yes you could be right

TexMurphy

Hi there guys.

To end this mass international speculation, I am from the UK born and raised. Thanks for the help guys!

leahciM

TexMurphy wrote: »

.

To end this mass international speculation,

This made me :rotfl: