What is a Dual Listing?

We usually think of publicly traded companies as being traded on a single exchange, such as the NYSE. However, there are also companies that are traded on two or more listings. Dual-listed companies, as these are called, can take advantage of a number of benefits of trading on more than one exchange, but as you might expect, there are also drawbacks.

How Does a Dual Listing Work?

Dual listings allow companies to be listed on multiple stock exchanges. Usually, the process works with international companies that have presences in multiple markets. Companies that engage in dual listings benefits from the opportunity to raise more capital and increase their investment base. Major Canadian companies, for example, are also listed on US exchanges because a large portion of their audience tends to be American.

This example points to another tendency of dual-listed stocks. Companies tend to approach countries that overlap with their home company on either language or culture. Because English is a common language between the US and Canada, the double listing makes sense.

Yet Canadian companies are also double-listed on European stock exchanges to gain exposure to the broader European market.

Pros and Cons of a Dual Listing

Discover the pros and cons of dual listing a company, how it is different from secondary listing and what it means for the financial reporting process.

The advantages of dual listing should be clear.

When companies gain access to new markets, their shareperformance is favorable due to the increased ratio of investors. In some cases, worldwide investors have more time to purchase shares. When differing time zones are taken into account, the trading day extends beyond 9 to 5.

More markets lead to more liquidity; with a smaller market pool, liquidity is lower.

Diversification comes into play, too. Being listed in multiple markets may protect a company against nation-specific economic problems. For example, if a recession hits Europe but not North America, European companies listed on US exchanges have a measure of protection. Share prices may decline in Europe, but not in the US.

The benefits sound great. But dual-listed stocks come with drawbacks, too.

It costs money to get listed on different exchanges. Along with the additional expenses of getting the initial listing, there are ongoing costs associated with being listed on multiple exchanges.

The process also requires more time and attention from management. For example, a dual listing means twice as many financial reporting requirements to adhere to — one set for each market.

If the company is raising funding for an IPO through road shows, travel to the additional markets is another time and expense to factor in.

Secondary Listing vs. Dual Listing

Secondary listings are related to dual listings, but there is an important distinction.

The phrase dual-listed stocks refers to companies listed on multiple exchanges when those exchanges differ widely in terms of region or requirements. Secondary listings tend to refer to companies getting listed on exchanges that share more similarities than differences.

Examples of Dual-Listed Companies

Many multinational companies maintain listings on several exchanges. Dual-listed stocks include household names such as:

• Carnival Corporation, the parent company of Carnival Cruises
• Barrick Gold, another mining company
• Unilever, the consumer goods company
• Brambles, a logistics company
• Investec, a financial company

Taking your company public is a lengthy process that involves many decisions. Is your business seeking IPO solutions or a SPAC/de-SPAC listing? Should you dual list the business or focus on a single exchange first?

From startup phase through maturity, DFIN provides financial reporting software and flexible support solutions for publicly traded companies, including double listed companies. Discover how our solutions promote swift due diligence and faster deal making, streamline the financial reporting process and protect the company’s intellectual property through best-in-class security standards.