Primary Listing

What Is a Primary Listing?

A primary listing is the vitally stock exchange where a public company's stock is traded. For certain companies, it is significant to have a lofty primary listing on the New York Stock Exchange (NYSE) or Nasdaq, as this loans credibility to the stock and makes investors bound to purchase shares. Notwithstanding a primary listing, a stock might trade on other exchanges with secondary listings. A company should do this to increase its liquidity and investor reach.

Grasping Primary Listings

Stocks previously become available on an exchange as part of a primary listing after a company leads its initial public offering (IPO). In an IPO, a company prices and offers shares to an initial set of public shareholders. After the IPO "drifts" these shares into the hands of public shareholders, the shares can be bought and sold on a listed exchange, through the secondary market.

Listing requirements contain the different criteria and least standards laid out by stock exchanges, like the NYSE, to permit enrollment in the exchange. Just when an exchange's listing requirements are met can a company list shares on that exchange for trading. Companies that don't meet listing requirements might in any case have the option to offer shares for trading over-the-counter.

For instance, Snap (SNAP), the parent company of famous social media app Snapchat, was one of the greatest expected IPOs of 2017. It chose to list shares on the NYSE and started trading on March 2, 2017. The NYSE records in excess of 2,400 companies, including a large number of the Dow Jones Industrial Average (DJIA), with a total market cap during the several trillions of dollars.

Dual Listing

To be listed on more than one exchange, a practice called dual listing or cross-listing, the company must meet the requirements to be listed on these other exchanges, for example, company size and liquidity of shares.

Dual listing is appealing to numerous non-U.S. companies as a result of the depth of the capital markets in the U.S., the world's biggest economy. Companies will more often than not list in countries that have a comparable culture or share a common language with their native jurisdiction. For instance, large numbers 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 rigid. As well as meeting the exchange's listing criteria, the foreign company must likewise fulfill U.S. regulatory requirements, repeat its financials, and sort out for clearing and settlement of its trades. For instance, cross-listing would permit a multinational corporation to trade on the NYSE, yet in addition on the London Stock Exchange. In the event that the company doesn't persistently meet an exchange's listing requirements, it will be delisted.

A famous 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.

Benefits of Listing on an Exchange

Past notoriety, there are a number of benefits when a company's shares are listed publicly on an exchange. These benefits might include:

• The ability to procure other companies utilizing equity rather than just money
• Drawing in the consideration of persuasive investors, hedge funds, mutual funds, and institutional traders
• The ability to raise funds through the issuance of extra offerings of stock
• An enhanced ability to draw in and better repay representatives
• A reduction in the costs of getting capital through credits

Features

• A primary listing on a conspicuous exchange frequently flags that the issuer's securities are great and that the issuer is reputable.
• Notwithstanding its primary listing, a stock might trade on other exchanges with secondary listings to increase liquidity and investor reach.
• A primary listing alludes to the exchange on which a company's shares previously appeared, essentially through an IPO.
• To gain a primary listing, the responsible company must meet a set of severe financial and regulatory criteria.