Interlisted Stock

What Is an Interlisted Stock?

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 thought to offer a range of benefits to the listing company, primarily access to more and cheaper capital.

How Interlisted Stocks Work

A Canadian company that wanted to interlist its shares could, for example, trade on both the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE), provided that it met the requirements of regulators in both Canada and the U.S. For example, Sun Life Financial, a Canadian financial services company, is listed on both the NYSE and TSX, which means investors can buy and sell shares in the company on both exchanges.

Advantages of Interlisting

The advantages of listing on more than one exchange include gaining access to more investors and increasing a stock's liquidity, which in theory lowers the cost of raising capital. For example, Canadian companies may want to gain more exposure to international investors by listing in the U.S. This includes investors outside the U.S. who buy stocks on U.S. exchanges. There are dozens of companies listed on the TSX that are also listed on a U.S. exchange.

Interlisting may also raise awareness of the company’s brand and add to 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 tougher regulatory requirements in the second country.

Many companies have shares that trade on 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 cross-listing there and elsewhere and is sometimes referred to as dual listing. But dual listing also refers to an arrangement by which two companies function as one entity but maintain separate listings, almost always in different countries. Examples include BHP, Rio Tinto Group and Unilever. This type of dual listing is usually the result of a merger.

Arbitrage and Interlisted Stocks

It is possible for highly sophisticated traders to profit from deviations in share prices of interlisted stocks on the different exchanges or the currencies of the countries in which they are listed. This is called arbitrage and is a complicated, high-risk trade that depends on prices eventually converging.