Now here is something that dramatically expands what the US market actually gives you access to.

Think about Taiwan Semiconductor. The company that manufactures the vast majority of the world’s most advanced chips, including every NVIDIA AI chip and every Apple iPhone processor. It is one of the most strategically important businesses on earth. It is headquartered in Taiwan, listed on the Taiwan Stock Exchange, and reports in New Taiwan dollars.

How does an investor in Mumbai or New York buy shares in it?

Through an American Depositary Receipt, or ADR.

Here is how it works. A US depositary bank, typically JPMorgan, Citibank, or Bank of New York Mellon, purchases the underlying TSMC shares on the Taiwan exchange and holds them in custody. 

It then issues certificates in the US, each representing a fixed number of underlying shares, denominated in dollars, tradeable on US exchanges during normal US market hours.

From your side of the transaction, buying TSMC’s ADR is completely indistinguishable from buying any US stock. You open your account, search the ticker, buy. You see your returns in dollars. Any dividends come in dollars. You never have to think about the Taiwan exchange, New Taiwan dollars, or settlement differences.

Behind the scenes, the depositary bank handles all the currency conversion, corporate action administration, and custody.

This matters enormously for Indian investors, because it means the US market is not just a gateway to US companies. It is a gateway to many of the most important businesses in the world.

Samsung trades in the US via ADR. So does Nestlé, Shell, Toyota, Alibaba, LVMH, Infosys, ICICI Bank, and hundreds more. That last example is worth pausing on. Indian companies like Infosys and ICICI Bank trade as ADRs in the US. The logic can even run in reverse.

ADRs come in different levels based on disclosure requirements. Level 1 ADRs trade over the counter with minimal SEC filings. Level 2 and Level 3 ADRs list on major exchanges with comprehensive reporting requirements, similar to US domestic companies. Alibaba’s 2014 New York IPO, the largest in history at that time, was a Level 3 ADR. When you hear about a foreign company “listing in the US,” that is almost always what they are doing.