Summary
- Companies can list both on NYSE and NASDAQ; it is called dual listing.
- The liquidity of the stocks goes up after they list both on both the exchanges.
- Companies often prefer to go for dual listing for visibility and business expansion.
Companies can list their stocks simultaneously at the New York Stock Exchange and the NASDAQ Composite Index. It is called dual listing. But they must fulfil the specific requirements of the exchanges and pay the fees.
Multinational companies often prefer a dual listing to increase their liquidity. Companies like Walgreens Boots Alliance (WBA) and Charles Schwab (SCHW) had experimented with the dual listing before but returned to a single stock exchange listing.
Why Do Companies Opt for Dual Listing?
Besides publicity, multinational corporations prefer to list on both NYSE and NASDAQ because it helps them raise capital from more investors. It also means that the company has enough stocks, and investors can buy them from both the exchanges whenever they want. Finally, it also affords convenience to investors as the stocks are available on both indexes.
Generally, stock liquidity is measured by a “bid-ask” spread. It means the amount by which the selling price or ask price exceeds the buy price or the bid price.
Increased liquidity of stock prices at more than one stock exchanges causes a bid-ask-spread decrease, thereby making it easier for investors to buy or sell stocks.
In 2004, NASDAQ launched the dual-listing initiative, offering companies the chance to get concurrently listed on both NYSE and NASDAQ for the first time.
Hewlett-Packard, Apache Corp., Cadence Design Systems (CDN), Countrywide Financials (CFC), Walgreens Boots Alliance (WBA), and Charles Schwab (SCHW) had listed at both the exchanges. However, SCHW and WBA later returned to a single stock exchange listing.
Source: Pixabay.
The NASDAQ initiative had provided investors with the opportunity to trade electronically with multiple participants. However, the decision had sparked a debate about whether it was good for the shareholders. Would the system help maintain the high trading standards?
Also read: What Are The Three Biggest Stock Exchanges In The US?
What is dual listing?
When the company is listed at more than one stock exchange, it is called dual listing. Multinational companies opt for a dual listing to raise more capital as it gives a chance to reach out to investors in more than one country. For example, the Canada-based gold mining company Barrick Gold is listed in Canada (TSX) and the US (NYSE).
Global firms can list their shares at the stock exchange of another country through DRs or depository receipts. DRs are negotiable certificates given by banks representing shares in a foreign company and traded at the local exchange. For instance, US citizens can buy UK-based companies’ stocks listed on the London Stock Exchange, NYSE, or NASDAQ.
In other words, companies can sell their stocks locally as well as overseas through DRs. US investors can buy foreign stocks through the American Depository Receipts (ADRs).
Source: Pixabay.
What is Nasdaq?
NASDAQ is a New York-based stock exchange where people can buy or sell stocks electronically. The Financial Industry Regulatory Authority (FIRA), previously called the National Associations of Securities Dealers (NASD), had created Nasdaq in 1971.
NASDAQ has over 3,000 companies listed on its platform. Most of the companies are tech giants like Microsoft, Google, Amazon, and Oracle. Its market capitalization is around US$1.1 trillion, making it the second-largest stock exchange in the US after NYSE.
What is NYSE?
The New York Stock Exchange is the world’s largest stock exchange by market capitalization at US$28.5 trillion. It Intercontinental Exchange owns it since 2013.
NYSE is also known as an auction market, where trading happens directly between buyers and sellers who auction the stocks for the highest bid. Dealers set the bidding price after sellers sell the stocks. Dealers or brokers trade physically on the floor of the building.
Also read: Is It Good To Invest In US Stocks?
How To List on NASDAQ And NYSE?
To be listed on NASDAQ, companies should have at least 1,250,000 publicly traded outstanding stocks when listed. In addition, it should exclude stocks with directors, owners, or beneficiaries, typically comprising the 10% share in the company.
The stock price should be a minimum of US$4 at the time of listing. But the cost can be reduced if the firms meet other requirements.
There should be at least three market makers/brokers to sell stocks. Also, companies need to follow NASDAQ’s ’s corporate governance rules-4360, 4350, and 4351. They also need to pay US$25000 as an application fee to be considered for listing. After this step, they need to pay around US$150,000-US$295,000 as an entry fee.
Also read: Are Penny Stocks High Risk?
Companies that plan to list on NYSE should have 1.1 million publicly-traded outstanding shares with a combined market value of US$100 million. Like NASDAQ, NYSE also sets the minimum stock price at US$4. There are also application fees, entry fees, and yearly entry fees, depending on the number of stocks listed.
Disclaimer
The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media LLC (Kalkine Media, we or us) and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties.The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures/music displayed/used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it, as necessary.
