What is a Cross-Listing?
Cross-listing (also known as dual listing) is the listing of any security on two or more different exchanges.or
How Does a Cross-Listing Work?
Let's assume Company XYZ is a Canadian public company that lists its on the Toronto Exchange. Company XYZ could more shares and list them on the New York . Then, people in both the United States and Canada can buy and sell Company XYZ Exchange ( )stock. By cross-listing, however, Company XYZ must comply with all of the legal and exchange requirements that apply to companies doing business in the United States.
Why Does a Cross-Listing Matter?
Cross-listing accomplishes two things for an liquidity of the security because there are more places to buy and sell, there are more participants in the and there is sometimes more time to trade the (if the exchanges are in different time zones). Second, it often helps the raise more capital because it makes more investors available from other markets and gives the company more exposure in general. This theoretically lowers the cost of capital and furthers the idea of efficient markets, although government influence on foreign exchange or capital flows often presents difficulties.. First, it tends to increase the
Cross-listing also has several effects on a volume. The largest of these is disparity in trading prices. For example, Company XYZ might close at $5 per share on the Toronto Exchange and $4.90 on the on the same day. Theoretically, this should not be the case. Several studies suggest that variances in listing requirements among the exchanges, different rules and differences in the level of market regulation (particularly the effects of the U.S. Sarbanes-Oxley Act) often cause these disparities.'s price and