● A dual listing refers to a company getting listed on two or more primary stock exchanges.
● Secondary listing is when a company lists its same stock on other stock exchanges than the primary one.
● Dual listing offers companies additional capital and higher liquidity because their shares are accessible to more investors.
A dual listing is when a company goes public on two or more stock exchanges; both or all are considered primary.
In a secondary listing, the company lists its stock on other stock exchanges than the primary one to expand its investor base.
How a Dual Listing Works
Generally, companies that intend to get dual-listed would first choose to go public in their home countries. Then they would get listed on stock exchanges in other countries, considering their business models and major markets.
Many American firms choose to go public domestically only because the US capital market is the largest in the world.
For non-American companies, the depth of the US capital market is also attractive.
Technically, a company has to meet every exchange's requirements before getting dual-listed. The process is usually time-consuming and costly, involving stringent scrutiny and regulation. Furthermore, shares of a dual-listed company cannot be directly traded in different jurisdictions. Its stock price can be affected by trading hours and exchange rates.
On the other hand, a dual listing gives the company access to more potential investors, increasing the possibility of raising more capital and providing higher liquidity. The company may also use it to improve its international image.
How a Secondary Listing Works
A secondary listing is under less scrutiny and regulation than a dual listing, so the procedures involved are usually simpler. A company that seeks a secondary listing may also enjoy more requirement waivers and exemptions.
Generally, a secondary-listed company only needs to abide by regulations of the primary exchange, without having to pay for the cost of a complete listing on other exchanges.
Since the shares can be traded across exchanges, the company's stock price in different jurisdictions remains essentially the same (adjusted for exchange rates).
So the share price in the secondary market is subject to price fluctuations in the primary market.
Moreover, it's important to differentiate between secondary listings and American Depositary Receipts (ADRs). Technically, ADRs are contracts representing securities of a public company and can be traded on multiple exchanges.
Both dual listing and secondary listing have their pros and cons. It's up to the company to decide which form suits its goals and priorities better.