Latest Stock News – OTC Stocks and ADRs
The term OTC has the official meaning of `over the counter` even though in today’s modern world this is mostly thought of as `over the computer`. In the past to buy and sell shares that were unavailable on the stock exchange potential investors would need to contact a broker who would then contact another broker to make a trade over the telephone which unfortunately was never the most sound system they could have used. Then in a revolutionary move in nineteen seventy one the NASDAQ was created providing the brokers with an automated stock quotation system for trading.
All of a sudden it was very much easier to find a better price for any transaction and also had the additional benefit of monitoring all trading activities of any given broker. Many of today’s stocks which are listed on a stock exchange are traded in a face to face fashion from a single location which are generally called `trading pits`. All other stocks fall into the OTC bracket and are traded electronically through a network of brokers across any given country. The NASDAQ stock market today is the main OTC system that is in place in America and lists close to 500 companies. There are many companies contained within this system with some being some of the major players in their fields such as Microsoft and Intel. There are thousands more companies within the OTC which may be considered obscure which unfortunately for them do not meet NASDAQ`s requirements for listing. ADR`s or American depositary
Accounts and the very similar ADS`s or American Depositary Shares provide people in America the facility to easily buy and sell shares in many foreign companies that would not usual trade on the U.S stock market. If these were not in place investors would find that if they wished to buy stocks in companies in lets say Germany then they would have to convert their funds from dollars into euros and then attempt to buy the share via the German stock market which is named the Deutsche Borse. The main advantage of this method is that through ADR`s the shares the investor purchases in any given company are held by the American Financial Institution which may be based overseas making it much easier for the potential investors to trade with their beloved American dollars. Another additional benefit of ADR`s is that it entitles the investor to dividends and capital gains but unfortunately they still do not receive any type of voting rights within a company.