Cross-Listing


Cross-Listing
The listing of a company's common shares on a different exchange than its primary and original stock exchange. In order to be approved for cross-listing, the company in question must meet the same requirements as any other listed member of the exchange, such as basic requirements for the share count, accounting policies, filing requirements for financial reports and company revenues.

Some of the advantages to cross-listing include having shares trade in multiple time zones and in multiple currencies. This gives issuing companies more liquidity and a greater ability to raise capital. Most foreign companies that cross-list in the U.S. markets do so via American depositary receipts (ADRs).

The term often applies to foreign-based companies that choose to list their shares on U.S.-based exchanges like the New York Stock Exchange (NYSE). But firms based in the U.S. may choose to cross-list on European or Asian exchanges, a strategy that may become more popular if the U.S. dollar struggles against major foreign currencies for a lengthy period of time.
The adoption of Sarbanes-Oxley (SOX) requirements in 2002 made cross-listing on U.S. exchanges more costly than in the past; the requirements put a heavy emphasis on corporate governance and accountability. This, along with generally accepted accounting principles (GAAP) accounting, makes for a challenging hurdle for many companies whose "home" exchange may have laxer standards.


Investment dictionary. . 2012.

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