Secondary Listing

In trading, a secondary listing or cross listing is an arrangement by which a company is listed on stock exchanges other than the primary exchange on which the security is listed.

In order to have its stock listed on an exchange, a company must meet the exchange’s capital and reporting requirements. Depending on the exchange, the reporting requirements for secondary listing may be less stringent than the reporting requirements for primary listings. This is particularly true when the rules of the secondary exchange are similar to those of the primary exchange because acceptance of the company by one the primary exchange already indicates that the company has met certain requirements. The costs of maintaining a secondary listing may also be lower than those of maintaining a primary listing.

Secondary listings are commonly used by companies looking to access new capital markets. They may also be used to maintain a presence on their former primary exchange after moving their primary listing to a different exchange.

Secondary listing are not the same as dual listings. Dual-listed companies have two primary exchanges, and must meet primary listing reporting requirements and costs on both exchanges. Dual listings are primarily used when the geographical reach or listing requirements of two exchanges differ broadly. Secondary listings, on the other hand, are often used when the listing requirements of two exchanges are similar.

Secondary listings should also not be confused with listings of depository receipts (like American depository receipts). Exchanges on which a company is listed sell actual shares of that company. Depository receipts are simply contracts which give their holders the right to obtain specific shares upon request. Depository receipts based on stocks or other securities may be listed on many exchanges. Holders of depository receipts must first exchange those receipts for the underlying shares before they become co-owners of the company and obtain the rights to vote and receive dividends.

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Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.