Dual Listing

What Is a Dual Listing?

A dual listing alludes to a listing of any security on at least two different exchanges. Companies utilize dual listings due to their benefits, which incorporate extra liquidity, increased access to capital, and the ability for their shares to trade for longer periods assuming the exchanges on which their shares are listed are in various time regions.

A few exchanges have a number of listing categories for companies that look for a dual listing, each with various requirements and benefits.

How a Dual Listing Works

A dual listing, otherwise called interlisting or cross-listing, is appealing to numerous non-U.S. companies in light of the depth of the capital markets in the U.S., the world's greatest economy.

Data demonstrate that companies will generally list in countries that have a comparable culture or share a common language with their native jurisdiction. For instance, a large portion of the greatest Canadian companies are likewise listed on U.S. exchanges.

A foreign company might look for an ordinary listing, the most renowned type of listing, on an exchange like the NYSE or NASDAQ, yet the requirements to do so are severe.

As well as meeting the exchange's listing criteria, the foreign company additionally needs to fulfill U.S. regulatory requirements, repeat its financials, and set up for clearing and settlement of its trades.

A well known form of dual listing for some leading non-U.S. companies is through American Depositary Receipts (ADRs). An ADR addresses the foreign shares of the company held in trust by a custodian bank in the company's nation of origin and conveys similar rights of the shares.

Note that the stock price of a dual-listed company ought to be roughly similar in the two jurisdictions, in the wake of taking currency differences and transaction costs into account.

In any case, arbitrageurs would step in and take advantage of the price differences. All things considered, price divergences really do happen occasionally, particularly while trading hours don't overlap and there has been a huge price move in one market.

Advantages and Disadvantages of a Dual Listing

There are various advantages of a dual listing. Companies gain admittance to a bigger pool of possible investors, which can be beneficial for investors too.

For instance, numerous Australian and Canadian resource companies list their shares on European exchanges in view of substantial investor interest, somewhat due to the relative lack of nearby resource companies.

A dual listing further develops a company's share liquidity and its public profile on the grounds that the shares trade on more than one market. A dual listing likewise empowers a company to broaden its capital-raising activities, as opposed to being dependent just on its domestic market.

Among the downsides is that dual listing is costly due to the costs engaged with the initial listing and continuous listing expenses. Varying regulatory and accounting standards may likewise require the requirement for extra legal and finance staff.

A dual listing could place more requests on management too, given the extra time required to speak with investors in the second jurisdiction through roadshows, for instance.

Features

Taking into account exchange rates and different entanglements, stock prices ought to continue as before on the two exchanges. On the off chance that not, a mediator will unite them.
A dual listing is the listing of any security on at least two exchanges.
A few companies find it challenging to monitor their share trading in two markets all the while and may have to start separate marketing and investor-relations plans.
A well known way for non-U.S. companies to dual rundown in the U.S. is by utilizing ADRs, or American Depository Receipts.
The primary advantage of a dual listing is the access to extra capital and increased liquidity.

FAQ

What Is the Difference Between a Dual Listing and a Secondary Listing?

A dual listing principally connects with listings on at least two exchanges when the exchanges vary enormously, especially concerning geology and requirements. A secondary listing is the point at which the requirements and geology of the various exchanges sharpen all the more closely to each other.

What Are Some Companies With Dual Listings?

Companies with dual listings incorporate Investec, Unilever, Carnival, Mondi Group, and Rio Tinto.

A dual listing doesn't influence a company's share price. Subsequent to thinking about transaction costs and exchange rates, a company's share price ought to be similar on the two exchanges and not influenced at all. Over the long term; notwithstanding, it is conceivable that a company with strong financials and business outlook can benefit from a dual listing by having greater liquidity and greater access to capital, which could further develop the share price.