A company can list its shares on more than one exchange, which is often referred to as a dual listing.A stock can trade on any exchange in which it is listed. However, companies must meet all of the exchange's listing requirements and pay for any associated fees in order to be listed.
Key Takeaways
- A company can list its shares on more than one exchange, which is referred to as dual listing.
- In order to be listed, a stock must meet all of the exchange's listing requirements and pay for all associated fees.
- A company might list its shares on several exchanges to boost the stock's liquidity.
- Multinational corporations might list on multiple exchanges, including their domestic exchange and the major ones in other countries.
Understanding Why Stocks Trade on Multiple Exchanges
Although companies can list their stocks on multiple exchanges, very few companies actually do it. Companies such as Charles Schwab (SCHW) and Walgreens Boots Alliance (WBA—formerly known as Walgreens—previously experimented with being dual-listed on the NYSE and NASDAQ, but have since returned to being listed only on a single exchange.
Liquidity
One reason for listing on several exchanges is that it increases a stock's liquidity, which means that there are plenty of shares available for market demand. A dual listing allows investors to choose from several different markets in which to buy or sell shares of the company.
A stock's liquidity can be measured by the bid-ask spread, which is the amount by which the selling price, called the ask price, exceeds the buy price, called the bid price.The increased liquidity for stocks on multiple exchanges makes the stock's bid-ask spread decrease, making it easier for investors to buy and sell the security at any time.
Multinationals
Multinational corporations also tend to list on more than one exchange. These companies may list their shares on both their domestic exchange and the major ones in other countries. For example, the multinational corporation BP (BP)—formerly British Petroleum—trades on the London Stock Exchange and the New York Stock Exchange (NYSE).
Listing on ExchangesThrough Depositary Receipts
The popularity of depositary receipts has increased the number of companies trading on exchanges in different countries. A depositary receipt (DR) is a negotiable certificate that represents equity shares in a foreign company that's traded on an international stock exchange.
Depositary receipts are helpful to investors since they allow the purchase of equity shares of foreign companies without trading directly on a foreign market. In other words, companies can list their shares on their local exchange and also through a depository receipt in another market so that foreign investors have access. A depositary receipt can be issued on a foreign exchange by the bank holding the shares with or without the endorsem*nt of the company being traded.
Investors in the U.S. can access foreign stocks through American depositary receipts (ADRs).An ADR is denominated in U.S. dollars whereby a U.S. financial institution overseas holds the shares. ADRs are a great way to buy shares in a foreign company while earningcapital gainson the investment and dividend income—or cash payments by companies to their shareholders.
Depositary receipts allow investors around the world to purchase and sell large international companies' stock. An example of a well-known company with a heavily tradeddepositary receipt trading on the NASDAQ is the Chinese technology giant,Baidu(BIDU).
FAQs
A company can list its shares on more than one exchange, which is often referred to as a dual listing. A stock can trade on any exchange in which it is listed. However, companies must meet all of the exchange's listing requirements and pay for any associated fees in order to be listed.
Can stocks be traded on more than one exchange? ›
Dual-listing refers to the process of listing a stock on multiple stock exchanges. This is done for a variety of reasons. It increases liquidity, provides more avenues to raise capital, and potentially allows for more trading time if the exchanges are open at different times.
Can a company only be on one stock exchange? ›
Stocks can be "listed"—offered for trading—on one stock exchange or on multiple exchanges.
What happens when a stock is listed on two exchanges? ›
Dual listing allows a company to increase its access to capital and makes its shares more liquid. The price of shares of a dual-listed company on two different exchanges should be exactly the same after accounting for the exchange rate.
Can you have more than one stock? ›
More recent research suggests that investors taking advantage of the low transaction costs afforded by online brokers can hold as many stocks as they want.
Can you trade stocks on two different platforms? ›
Just as diversifying your investment portfolio across different asset classes mitigates risk, having accounts at multiple brokerage firms can provide a form of diversification. It ensures that your assets are not concentrated in one place, reducing the impact of potential issues with a single broker.
Can I buy stock on one exchange and sell on another? ›
Yes, you may buy stock from one exchange and sell it on another exchange after taking delivery of shares in your Demat account. Once the shares get reflected in your Demat, you can do either of the following, i.e. (i) Buy in NSE and sell in BSE; and (ii) buy in BSE and sell in NSE.
Is there only one stock exchange? ›
Those futures exchanges that also offer trading in securities besides trading in futures contracts may be listed both here and in the list of futures exchanges. There are twenty one stock exchanges in the world that have a market capitalization of over US$1 trillion each.
How many stock exchanges are there? ›
While there are around 60 major stock exchanges worldwide today, the Amsterdam Stock Exchange (now part of Euronext) is considered the oldest, dating back to 1602.
Can you exchange one stock for another? ›
A stock swap occurs when shareholders' ownership of the target company's shares is exchanged for shares of the acquiring company. During a stock swap, each company's shares must be accurately valued in order to determine a fair swap ratio between the two shares.
The 2% rule is an investing strategy where an investor risks no more than 2% of their available capital on any single trade. To apply the 2% rule, an investor must first determine their available capital, taking into account any future fees or commissions that may arise from trading.
What are stock exchange rules? ›
Stock exchange listing rules are rules and regulations that companies must follow in order to be listed on a stock exchange. These rules are important as they help protect shareholders and investors from potential risks, maintain trust and transparency within the organization, and increase investor confidence.
What are the two 2 types of stock exchanges? ›
The two basic types of stock markets include:
- The exchanges: They provide a market that facilitates the sale and purchase of stocks among the market participants. ...
- Over the counter: Here, the market participants perform their transactions of stock through a dealer.
A company can list its shares on more than one exchange, which is referred to as dual listing. In order to be listed, a stock must meet all of the exchange's listing requirements and pay for all associated fees. A company might list its shares on several exchanges to boost the stock's liquidity.
How many stocks are in the Warren Buffett portfolio? ›
Among the 47 stocks Berkshire Hathaway holds, the top 10 represent about 84% of the company's holdings. Here's a rundown of Buffett's 10 largest holdings based on Berkshire Hathaway's most recent filings, including its 13F filing from May 15, 2024.
How many stocks should you own in Warren Buffett? ›
This means that buying more than 12-20 stocks will not make your portfolio more immune from market volatility. Indeed, looking at portfolios of successful investors like Warren Buffett and other gurus, you see 8-15 stocks, which is the correct diversification.
Do companies list on both NYSE and Nasdaq? ›
If a stock is dually listed on the NYSE and Nasdaq, it can be bought on one and sold on the other. If not dually listed, the transaction must be completed on the exchange listed.
Does it matter which exchange you buy a stock on? ›
Why the stock exchange matters when investing in ETFs. Minimising fees is the main reason to pick the right stock exchange to buy and sell your ETFs. Most ETFs are available on several stock exchanges. But your broker charges a fee that varies by stock exchange.
What are the disadvantages of dual listing? ›
Increased regulatory burden, divergence in shareholder interests, complexity in capital structure, liquidity fragmentation, and increased costs and administrative burden are some of the key drawbacks that companies need to carefully consider before pursuing a dual listing strategy.
Can you transfer stocks from one exchange to another? ›
Yes. Brokers will directly transfer your investments from one account to another. This is typically easier and more profitable than manually selling stocks and repurchasing them. How do I transfer my stocks from one broker to another?
