ADR Pass-Through Fee
The Formal Definition
A custody and administrative surcharge charged by depository banks on American Depositary Receipts (ADRs) to cover registration and cross-border custodial compliance.
ADR Fee = Number of Shares Held × Depository Surcharge ($0.01 to $0.05/share)
Cole Barrett's Reality Check
The Unvarnished Bottom Line"Think you avoided foreign custody charges by buying foreign giants like TSMC, Alibaba, or Shell on the New York Stock Exchange? Check your monthly statement. The depository bank bills your broker a couple of cents per share, and your broker passes that charge directly to your account."
Interactive Simulator: Test the Math
Real-World Example: Scenario Breakdown
Examining the real numbers for: Holding 2,000 ADR shares of a global semiconductor company for 1 year
| Execution Metric | Direct Local Shares via Global Broker | NYSE-Listed ADR Holding |
|---|---|---|
| Fee / Rate | Local market ticket fee | $0.00 'free' trade on entry |
| Spread / Buffer | Native exchange settlement | BNY Mellon / Citibank custodial levy |
| Execution / Status | No depository intermediary | $0.03 per share fee deducted from cash |
| Total Cost / Result | Zero custodial leakage | Unannounced cash leakage deducted from dividends or account cash |
How Brokers Weaponize This Term
Brokers advertise $0 commission on US-listed foreign companies without highlighting that depositary banks will deduct annual ADR custodial fees directly from your cash balance or dividend payments.
Broker Evaluation Matrix
Cole Approves
Interactive Brokers: Direct trading on native international exchanges, allowing investors to bypass US ADR wrappers.
Read Audit →Cole Flags / Avoids
US-Only Neobrokers: Forces international investments through US ADR wrappers, passing through annual depository fees.
View Trap Details →Frequently Asked Questions
Who charges the ADR fee—the broker or the bank?
The fee is charged by the depository bank (such as BNY Mellon, Citi, or JPMorgan) that created the ADR, and your broker simply passes that charge through to your balance.
How often are ADR fees collected?
ADR fees are typically assessed once a year, either deducted directly from dividend payments or debited from your uninvested cash.