ADR fees (American Depository Receipts)

Introduction to ADR

ADRs (American Depository Receipts) represent ownership of non-U.S. company shares which can be traded in U.S. markets. Most of Chinese companies traded on the U.S exchange are ADRs, for example JD, XPEV & BYDDF etc, these companies will incur regular ADR fees, commonly at $0.02-$0.05 per share every financial year.

List of Chinese ADRs can be referred at https://www.investing.com/equities/china-adrs

 

How the ADR fees being charged

DTC (Depository Trust Company) has started charging ADR FEE from broker-dealers and clearing firms since 2008, which in turn pass the fee to the investors. As ADR fees settlement will take some time, uSMART Singapore will freeze the corresponding amount on the record date and deduct on the bill date.

Generally speaking, ADR fees charging process resembles dividend paying process. Announcement date, Record date and Bill date are three important dates, ADR custodian bank will update these dates regularly.

Announcement Date: Custodian bank announce incoming ADR FEE

Record Date: Customers with settled positions on this date will be charged for ADR FEE, even if they sold the positions thereafter.

Bill Date: The actual charge date, the date may slightly differ between custodian bank to broker and broker to client due to time need for settlement.

 

ADR FEE rate and charge frequency

ADR fees rate range between 1 – 5 cents per share, different ADRs will have different charge rate and bill date, if corresponding stock issues dividend during the year, ADR fees will be deducted from the dividend amount in the name of dividend fee, if corresponding stock issues no dividend, ADR fees should be paid separately.

ADR fees are charged 1 to 4 times per year normally, the frequency might be be higher under special circumstances. The charge amount will be split accordingly. For example, if annual ADR fees is 2 cents and the charging frequency is 4 times a year, 0.5 cent will be charged each time.

If you are holding ADR stock, to avoid any force liquidation please ensure there is sufficient fund in your account for any potential future deduction.