Senior markets of the world are often seen as barometers for global economies. The New York Stock Exchange, Nasdaq, the London Stock Exchange, or the Toronto Stock Exchange — and the indices that follow them, such as S&P 500 or Dow — are common topics when it comes to discussing global financial activity. For those less in touch with the financial landscape, well-known companies across the world have shone a spotlight on these exchanges with large-scale initial public offerings.
While these senior markets have become beacons of the business world — and domestic companies will often default to listing on their domestic market — companies and capital are becoming increasingly mobile. Investors have greater discretion on how and where their funds are invested, either directly or by selecting certain funds, and businesses are recognizing the benefits of exploring exchanges in different jurisdictions.
The truth is, not all exchanges are created equal. Over time, each of these global markets has developed different strengths, offering a unique set of advantages to the companies that list on them. Instead of relying on the options in their own backyard, it’s important that executives also research other exchanges around the world.
Depending on their company’s size, status, and industry, executives might find that foreign exchanges have more to offer, especially if they’re looking to build an international brand reputation. This is why we continue to see the likes of Israeli tech firms listing internationally: They can be closer to their customers and access deeper pools of investor capital.
The Challenges of Listing Internationally
With so many diverse options available, some companies might find better access to more pools of capital by listing on more than one exchange. This may allow investors to trade in their domestic time zones or to access pools of capital that are more sophisticated in a certain sector. However, navigating various regulatory schemes can be complex, especially when dual-listing.
Listing in the United States, for instance, means you have to file with the U.S. Securities and Exchange Commission. But if you’re a Canadian company, you’re still subject to Canadian laws. Operating in various jurisdictions may mean having to hire lawyers within each one, adding to your overall operational costs.
Varying disclosure requirements can also complicate matters. Consider the mining industry as an example. In Canada, mining companies can only provide significant updates on their mineral properties — resource estimates, mine plans, and more — under the rules of National Instrument NI 43-101. Companies listed on Canadian exchanges and overseen by one of the Canadian Securities Administrators must file any NI 43-101 reports on SEDAR, the country’s electronic filing system for disclosure documents, so they’re available to investors and regulators.
In Australia, however, companies can make their property-related disclosures in press releases, which are also shared through their exchange’s announcement platform. Understanding and adhering to these different regulations can be a hassle, but companies that get it wrong can land themselves in hot water.
From a more logistical angle, companies considering foreign exchanges shouldn’t forget to …read more
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