Foreign Ordinary Shares

Market Structure
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6 min read
Updated Feb 21, 2026

What Are Foreign Ordinary Shares?

Foreign ordinary shares are shares of a foreign company that trade directly on a local exchange (like the OTC market in the US) rather than as American Depositary Receipts (ADRs). They usually carry a 5-letter ticker symbol ending in "F".

When you want to buy a foreign company like Nintendo or Tencent in the US, you typically have two choices: 1. ADR (American Depositary Receipt): A bank bundles the shares and issues a receipt that trades on the NYSE or Nasdaq. (Ticker usually 5 letters ending in Y). 2. Foreign Ordinary Share: You buy the actual share that trades in the home market, but the transaction is settled in US Dollars through the US OTC market. (Ticker usually 5 letters ending in F). The "F-share" is essentially the US broker executing a trade for the foreign stock and holding it for you. It allows US investors to own the stock without opening a foreign brokerage account. However, because these do not trade on major exchanges like the NYSE, they are often less liquid and have wider bid-ask spreads. They are the "unwrapped" version of the stock, offering direct ownership without the bank intermediary structure of an ADR.

Key Takeaways

  • They represent direct ownership in the foreign company.
  • Tickers typically end in "F" (e.g., TCEHY is the ADR, TCEHF is the ordinary share).
  • They often trade on the Over-The-Counter (OTC) market.
  • Liquidity can be significantly lower than the domestic listing.
  • They do not have the custodial fees of ADRs, but may have higher trading commissions.

How Foreign Ordinary Shares Work

Trading foreign ordinary shares involves a cross-border mechanism facilitated by market makers on the OTC market. When you place an order for an F-share (e.g., Nintendo's NTDOF), the market maker essentially acts as a bridge to the home market (Tokyo). They will look at the price of the stock in Japan, convert it to US dollars at the current exchange rate, add a spread for their service, and quote a price to you. Because the home market might be closed when you are trading (e.g., Tokyo is closed during US market hours), the price of the F-share may not move much during the US day, or it may move based on how US investors *think* the stock will open the next day in Tokyo. This disconnect can lead to price gaps. Settlement typically follows the home market's cycle but is handled in USD by your broker.

F-Shares vs. ADRs

Choosing the right vehicle for foreign exposure.

FeatureADR (e.g., Ticker ending in Y)Ordinary Share (Ticker ending in F)
StructureBank-issued receipt representing sharesDirect share ownership (via broker)
FeesAnnual custody fee (Pass-through)Often higher commission ($6.95+)
LiquidityUsually HighOften Low
Voting RightsPass-through (sometimes restricted)Direct (full rights)
ExampleTCEHY (Tencent ADR)TCEHF (Tencent Ordinary)

Why Buy the F-Share?

Why would an investor choose the illiquid "F" share over the liquid ADR? 1. Availability: Many foreign companies do not have a sponsored ADR program. The F-share might be the only way to buy them in the US. 2. Fees: ADRs charge "custody fees" (e.g., $0.02 per share per year) deducted from dividends. F-shares avoid this specific fee (though your broker might charge a foreign settlement fee). 3. Arbitrage: Sometimes the ADR trades at a premium to the ordinary share. Sophisticated investors might buy the cheaper F-share.

Real-World Example: Nintendo (NTDOY vs NTDOF)

Nintendo Co., Ltd. trades in Japan (7974.T). In the US, it has two tickers.

1The ADR (NTDOY): This is the most popular way for Americans to buy Nintendo. It has high volume and trades like a normal stock. 1 ADR = 1/8th of a share.
2The Ordinary (NTDOF): This represents 1 full share of Nintendo. The volume is much lower.
3Scenario: An investor wants to buy $10,000 of Nintendo.
4Decision: Buying NTDOY is easy and liquid. Buying NTDOF might result in a "bad fill" because the spread between the bid and ask might be $0.50 wide, whereas NTDOY is only $0.01 wide.
5Result: Unless the investor has a specific reason to own the ordinary share (like voting rights), the ADR is usually the more cost-effective choice due to liquidity.
Result: F-shares are often best reserved for companies that do not have a liquid ADR.

Risks of F-Shares

Liquidity Risk: This is the biggest danger. Some F-shares trade only a few hundred shares a day. If you place a "Market Order," you could get filled at a terrible price. Always use Limit Orders. Settlement Fees: Some brokers charge huge fees (e.g., $50) for foreign ordinary trades because they involve international clearing. Check your broker's fee schedule.

FAQs

It signifies that the security is a foreign issue trading in the US market. For example, ADDYY is the Adidas ADR, while ADDDF is the Adidas ordinary share.

Yes. You receive dividends declared by the company. However, they will be paid in the foreign currency and converted to USD by your broker, likely incurring a small FX conversion fee. You are also subject to foreign dividend withholding tax.

Generally, no. Most zero-commission apps like Robinhood do not support OTC trading or F-shares. You typically need a full-service broker like Fidelity, Schwab, or Interactive Brokers.

Theoretically, yes (adjusted for exchange rates). If Nintendo trades for 6,000 Yen in Tokyo and the exchange rate is 150 JPY/USD, the F-share in the US should trade around $40. If it deviates, arbitrageurs fix it.

The Bottom Line

Foreign ordinary shares (F-shares) open up the entire world of investing to US accounts, bypassing the limitations of the ADR list. While they offer direct ownership and access to niche companies that banks ignore, the lack of liquidity and potential for extra fees mean they are best suited for experienced investors who know how to use limit orders and research foreign markets. Before trading an F-share, always check the volume and your broker's commission schedule to ensure the trade makes financial sense.

Related Terms

AdrOtc MarketForeign Tax Credit

More in Market Structure

A-SharesAfter-Hours TradingAlternative Trading System (ATS)Artificial Intelligence (AI)Auction MarketAuctionAudit TrailsBid-Ask SpreadBlock TradeBond Market Liquidity
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At a Glance

Difficultyadvanced
Reading Time6 min
CategoryMarket Structure

Key Takeaways

  • They represent direct ownership in the foreign company.
  • Tickers typically end in "F" (e.g., TCEHY is the ADR, TCEHF is the ordinary share).
  • They often trade on the Over-The-Counter (OTC) market.
  • Liquidity can be significantly lower than the domestic listing.

Explore Further

International InvestingMarket Structure