Cross Listings On International Exchanges

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The past few decades have witnessed the increased internationalization of various firms through cross-listings on international exchanges. This has been facilitated by market liberalisation, which has led to greater integration of global securities markets. Cross-border listing has become one of the avenues for the integration of global securities markets.

There are two forms of cross-border listing, namely, direct listing and indirect listing. Direct listing implies that the firm concerned offers ordinary shares to the public. Indirect listing on exchanges is through Depository Receipts (DRs). Depository receipt is a negotiable certificate issued by a bank in a domestic country that represent ownership of shares in companies of other countries. Cross listing, particularly through DRs such as American Depositary Receipts (ADRs) or Global Depositary Receipts (GDRs), is a popular way of internationalization among firms from emerging economies. In addition to Europe and America, international firms are allowed to cross list in other countries through the DR programme.

There could be several reasons for a domestic company to cross-list, such as an expanding investor base, the desire to improve stock liquidity through its highly liquid secondary market, the increasing visibility of the company, a growing customer base, and the wish to take advantage of higher valuations. From the perspective of investors, cross listing mitigates some of the
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