Cross listing of shares
is when a firm lists its equity shares on one or more foreign stock exchange
in addition to its domestic exchange. This concept is distinctly different than examples such as: American Depositary Receipt
(ADR), European Depositary Receipt (EDR), International Depository Receipt (IDR) and Global Registered Shares (GRS).
ADRs, GDRs and the like are a mechanism to repackage a security primarily listed on an Exchange (such as Frankfurt) to enable it to be purchased by an investor outside of that market (such as within the US on the NYSE). This is a distinct instrument, as not all the rights may come with the ADR (GDR,EDR,IDR, etc.), and the ADR is subject to the fluctuations of the underlying currency. The original issue (on Frankfurt) would be priced in EUR, while the ADR is priced in USD. In most cases, the ADR is convertible back into the original instrument (but needs to go through a process of conversion). The ADR (GDR,IDR,EDR, etc.) also receives a different ISIN number, recognizing that it is not the same fungible instrument as the underlying stock.
However, many companies cross-list, where 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 ("multi-listed"). 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).
This primary listing activity should be noted as distinctly different than secondary listings, such as listings from the NYSE carried on regional exchanges such as Boston, Philadelphia or others within the same marketplace, or on MTF's (Multilateral trading facility
) such as Chi-X or BATS.
Also, this is distinct from being 'admitted for trading' where a foreign share is accessible in a different market through an exchange convention, and not actually registered within that different market.
Generally such a company's primary listing
is on a stock exchange in its country of incorporation, and its secondary listing(s)
is/are on an exchange in another country. Cross-listing is especially common for companies that started out in a small market but grew into a larger market. For example, numerous large non-U.S. companies are listed on the New York Stock Exchange
or NASDAQ as well as on their respective national exchanges such as Enbridge, BlackBerry Ltd, Statoil, Ericsson, Nokia, Toyota and Sony.