Cross listing8 Feb 2020 19:33
Cross-listing (or multi-listing, or interlisting) of shares is when a firm lists its equity shares on one or more foreign stock exchange in addition to its domestic exchange.
To be cross-listed, a company must thus comply with the requirements of all the stock exchanges in which it is listed, such as filing.
Cross-listing should not be confused with other methods that allow a company's stock to be traded in two different exchanges, such as... Dual listed companies,
Dual listed companies, where two distinct companies (with separate stocks listed on different exchanges) function as one company.
Multi listed or cross-listed shares, by contrast, are technically the same financial instrument. Fungibility is a concern across markets. For example, shares of IBM cannot be purchased on NYSE and sold, same-day, on the London Stock Exchange, even though IBM is cross listed in both markets. There is a re-registration process that must occur to move the number of outstanding shares from one jurisdiction to the other. This is primarily due to market inefficiencies and structures required to maintain the integrity of registered shares within specific jurisdictions (typically regulatory driven).
When a company decides to cross-list, the stock is technically fungible between exchanges. Royal Dutch Shell, IBM, and Siemens are all examples where the same issue is traded in multiple markets. However, in Frankfurt and Paris, they are traded in EUR, London in GBP, and on NYSE in USD. Prices are subject to local market conditions, as well as FX fluctuations and are not kept in perfect parity between markets. They tend to be more liquid than ADRs, GDRs and those types of conventions. While 'technically' fungible, these separate primary listings (they would all be considered 'primary' listings) are subject to re-registration which creates significant settlement risk if an investor wants to buy on one exchange and sell in another (especially where the currencies differ).
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