It stands for depositary receipt; a negotiable certificate that issued by a bank or similar financial institution (depositary) representing shares of stock in a foreign entity traded on a local exchange. Depositary receipts (DRs) allow investors to purchase equity shares in foreign entities, while for issuing entities, such receipts are a means to raise funds (capital) from the international market. Financial intermediaries (e.g., domestic custodian banks and overseas depositary banks) help a local entity raise capital from foreign investors.

Depositary receipts (DRs) represent underlying shares of an issuer which have been placed with the depositary or any custodian it may nominate for that purpose. The depositary acts as an agent of the issuer, connecting DR holders and the issuer. DRs are sold to investors in the target market (aka a host market) where trading, clearance and settlement take place in the currency of that market.

A given DR represents a number of underlying shares (or a fraction of a single share), based on a specified DR ratio. The depositary is responsible for paying the DR holders the dividends of underlying shares in the host market’s currency, after deduction of its fees and charges.

The deposit agreement defines the rights and obligations of all parties involved (an issuer, the depositary, and the DR holders).

In other contexts, DR may also denote terms such as debit balance or debit (as an entry).