What is an interlisted share?
An interlisted Stock is one that is listed on multiple stock exchanges, usually in a company’s home country and one or more additional countries. Interlisting is supposed to provide a range of benefits to the listing company, primarily access to more and cheaper capital.
Key points to remember
- An interlisted stock is a stock that is listed on more than one stock exchange, usually in a company’s home country and in one or more additional countries.
- The main benefit of interlisting for the company is to expose itself to more investors and capital.
- Interquoting is also known as cross-quoting and is sometimes referred to as double-quoting, although the term double-quoting may have a slightly different meaning.
How interlisted shares work
A Canadian company wishing to interlist its shares could, for example, trade on both the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE), provided it meets regulatory requirements in Canada and the United States. For example, Sun Life Financial, a Canadian financial services company, is listed on both the NYSE and the TSX, which means investors can buy and sell actions in the business on both exchanges.
Advantages of interlisting
The benefits of listing on more than one exchange include access to more investors and increasing the value of a stock. liquidity, which in theory reduces the cost of raising capital. For example, Canadian companies may want to gain more exposure to international investors by listing in the United States. This includes investors outside the United States who buy stocks on US stock exchanges. There are dozens of TSX-listed companies that are also listed on a US stock exchange.
Interlisting can also increase the company’s brand awareness and enhance its credibility and prestige, especially if the second listing is on Wall Street.
The main disadvantages of interlisting include the cost of listing on more than one exchange and possible additional and stricter regulatory requirements in the second country.
Many companies have actions which are traded on stock exchanges in several countries. CNOOC Ltd., a Chinese energy producer, is listed in Hong Kong, New York and Toronto.
Interlisting, Cross-Listing and Dual Listing
The term interlisting is commonly used in Canada. It is also known as a quotation there and elsewhere and is sometimes referred to as a double quotation. But dual listing also refers to an arrangement whereby two companies operate as a single entity but maintain separate listings, almost always in different countries. Examples include BHP, Rio Tinto Group and Unilever. This type of double listing is usually the result of a merger.
Arbitration and interlisted actions
It is possible for very sophisticated traders to take advantage of deviations in the prices of interlisted shares on the various stock exchanges or in the currencies of the countries in which they are listed. It’s called arbitration and is a complicated, high-risk trade that depends on price convergence.