DaytonBuck
I've always liked them
Can someone explain me to stocks of companies being traded on multiple exchanges? IE, LUKOIl out of Russia being traded on the Russian stock market, LSE and Nasdaq.
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- Thread starter DaytonBuck
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I'm not a finance guy and understand this only from the marketing perspective. Firms list on multiple exchanges because it increases their visibility, enhances competition for their shares, and decreases transaction costs by reducing exchange risk and costs. Exchanges also vary greatly in their reporting requirements and multiple listings allow a firm to respond to prospective shareholders with information that is organized in the way they expect.
The upside is that the firm can take advantage of liquidity in various areas of the world and will be thought to be more credible because it has met local listing requirements. The downside is that the firm now needs to incur the costs of reporting to the various stockmarkets where it lists.
Large companies in emerging markets often list on a local exchange and then list on the London Stock Exchange and one of the American or other African exchanges.
The upside is that the firm can take advantage of liquidity in various areas of the world and will be thought to be more credible because it has met local listing requirements. The downside is that the firm now needs to incur the costs of reporting to the various stockmarkets where it lists.
Large companies in emerging markets often list on a local exchange and then list on the London Stock Exchange and one of the American or other African exchanges.
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DaytonBuck
I've always liked them
I'm coming at this perspective of a caveman. Appreciate the response 19. Why wouldn't a company try to list themselves on every major stock exchange in the world? I see foreign companies getting listed in their home exchange and listed here. I don't see GM getting listed on the LSE or any other foreign market.
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Buckeye Buh Nim
Loving the Bucks since 1969
DaytonBuck;1127879; said:
A number of reasons.
There is a cost to list on each exchange, and that cost is not insubstantial.
Mega companies like GM feel they do not need to list everywhere. They feel they are big enough to bring the mountain to Mohammed so to say.
And naturally if you don't do business in a given country the value you get out of listing there is dubious.
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jimotis4heisman
Banned
arbitrage also plays a role. people make millions of dollars every day on arbitrage.
price convergence and arbitrage are relatively complicated but basically a big mac should sell at $1.99 everywhere in the world. if you can buy a big mac for $1.50 somewhere people are going to make money. likewise if you can sell a big mac somewhere for $2.50 people are going to make money.
toss in currency exchanges and whatnot and as buckey buh nim said it makes more sense for established companies to to list in one place. like anything in finance it can be made relatively simple or you can pay someone a lot of money to make it make no sense...
price convergence and arbitrage are relatively complicated but basically a big mac should sell at $1.99 everywhere in the world. if you can buy a big mac for $1.50 somewhere people are going to make money. likewise if you can sell a big mac somewhere for $2.50 people are going to make money.
toss in currency exchanges and whatnot and as buckey buh nim said it makes more sense for established companies to to list in one place. like anything in finance it can be made relatively simple or you can pay someone a lot of money to make it make no sense...
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PlanetFrnd
Head Coach
Listing on multiple exchanges is expensive but reporting is very expensive and tedious. Most int'l companies look to avoid the US if possible to avoid SarbOx. Some "private" US companies do as well (see KKR). Reporting can cost in the millions, esp. when considering audits, legal, etc. To do that twice for different GAAPs is not necessarily worth it.
Arbs are a consideration, but I wonder if they really effects companies' capitalization in a material way. In theory, even if a strong short exists in one market, you'd have to assume that a corresponding long position would exist in the other, to the extent that the market is sophisticated and/or liquid enough to facilitate complex trades.
Arbs are a consideration, but I wonder if they really effects companies' capitalization in a material way. In theory, even if a strong short exists in one market, you'd have to assume that a corresponding long position would exist in the other, to the extent that the market is sophisticated and/or liquid enough to facilitate complex trades.
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[quote='BusNative;112825;3]Listing on multiple exchanges is expensive but reporting is very expensive and tedious. Most int'l companies look to avoid the US if possible to avoid SarbOx. Some "private" US companies do as well (see KKR). Reporting can cost in the millions, esp. when considering audits, legal, etc. To do that twice for different GAAPs is not necessarily worth it.
Arbs are a consideration, but I wonder if they really effects companies' capitalization in a material way. In theory, even if a strong short exists in one market, you'd have to assume that a corresponding long position would exist in the other, to the extent that the market is sophisticated and/or liquid enough to facilitate complex trades.[/quote]
That sounds like what Frank the Tank said when he debated James Carville in "Old School"
Arbs are a consideration, but I wonder if they really effects companies' capitalization in a material way. In theory, even if a strong short exists in one market, you'd have to assume that a corresponding long position would exist in the other, to the extent that the market is sophisticated and/or liquid enough to facilitate complex trades.[/quote]
That sounds like what Frank the Tank said when he debated James Carville in "Old School"
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jimotis4heisman
Banned
true but i was thinking also of currency arbitrage.
simply put it is simple economics:
cost>benies
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DaytonBuck
I've always liked them
So with the example of LUKOIL. If I invest on the LSE in them is that just their UK operations I'm getting shares in?
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DaytonBuck;1128655; said:
Not sure. Get a prospectus and read it carefully. It could be only in their offshore operations, etc. Know what you buy. Get the company to send you their prospectus directly.
Enron was a top selling and highly respected share.
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DaytonBuck
I've always liked them
This a hypothetical for my own ignorance but what kind of effect would bad news for say Toyota have on stock prices in American and Japan. Would one share on a certain exchange get more or less of the blow than the other? Would they both react the same across the board?
If a company is working on multiple exchanges across the globe in different time zones and some news breaks that affects the companies shares. Could someone short/long or make a play with their shares off of the good/bad news before the market started trading in another time zone?
If a company is working on multiple exchanges across the globe in different time zones and some news breaks that affects the companies shares. Could someone short/long or make a play with their shares off of the good/bad news before the market started trading in another time zone?
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