Response reshape price.....as promised!9 Dec 2019 21:20
Dear R
Thank you for your question.
First some background.
As Faron is since 3 December listed on two exchanges, there is now in effect two separate markets for Faron’s share.
These two markets are not fully “interchangeable” as the securities traded on them are not the same: Faron Depositary Interests (DI’s) on London AIM and Faron Ordinary Shares on Nasdaq Helsinki. The DI’s are UK securities issued by Computershare Ltd.
The reason for their existence is: (quote from Faron AIM Admission Document Nov 2015)
“Trading through CREST using Depositary Interests
Shares in non-UK companies cannot be held and transferred directly into the CREST system.
Shareholders who wish to hold and transfer Ordinary Shares in uncertified form may do so pursuant to a Depositary Interest arrangement established by the Company (Faron sic.) in conjunction with Computershare Services PLC.”
In conjunction to the AIM IPO Nov 2015 Faron arranged the issuance of DI’s for the London AIM market. These are traded in London and only there. This arrangement has however caused complications for the (mainly Finnish) holders of Ordinary Shares, as:
“Trading Depositary Interests by holders in Euroclear Finland
Holders of Ordinary Shares (as opposed to DI Holders) will be required to obtain Depositary Interests in order to facilitate the trading and settlement of Ordinary Shares,…” (quote from AIM Admission Document)
The Holders of Ordinary Shares have to make a complicated and costly conversion between DI’s and Ordinary Shares each time they have sold/bough the securities. The avoidance of these costs was one of the reasons for the dual listing.
Now to your question
There are three main reasons for the price difference:
They are two separate securities:
There is conversion cost between these two, and
The DI’s a quoted in Sterling pounds in London while the Ordinary Shares are quoted in euro in Helsinki.
Though we are not actively monitoring the price difference it seems that during the first days of trading the price difference has varied between ca. 3% and ca.12%. It is very likely that this difference will get smaller as both markets find ways to reach an equilibrium. Equally likely there will always be some difference in the prices.
I hope this was helpful.
Kind regards
Yrjö Wichmann
Yrjö E K Wichmann
VP, Funding & IR
Lähettäjä: Rich G
Päiväys: 9. joulukuuta 2019 klo 11.40.49 UTC+2
Vastaanottaja: investor.relations@faron.com
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