Listing On An American Exchange
So you're thinking about listing your company on a stock exchange in the United States. Are you after more visibility, a more liquid market or are you planning on raising capital?
The US stock market is effectively the biggest, deepest and most liquid stock market in the world. With a thriving ecosystem of investors and institutions surrounding it the united states are an appealing port for capital and companies.
Does the US stock market effectively bring additional visibility and other benefits?
A listing on an American stock exchange can have numerous benefits the first being additional publicity on one of the most important financial markets in the world. This step opens a plethora of financing options from American banks, funds as well as other companies.
In case your company is looking for more capital an opening to American investors and funds can be an ideal solution. The investment tissue is vast and diverse and comprises hedge funds, pension funds, universities and all sorts of institutions looking for opportunities to put their capital to work.
The new visibility can draw other investors from other parts of the world notably from the middle east or europe which are accustomed to watching the American stock markets for investment opportunities. An international exposure can be beneficial to the growth of the company when its products come into contact with new markets or when it seeks new partners.
In the US the obvious stock exchange for companies to list on is the NYSE unless you are a tech company. In which case your target is the NASDAQ. Another lesser known option was the AMEX, now a part of NYSE.
The NYSE or new York stock exchange is the biggest stock exchange in the united states and the world. It also comes with a certain prestige and lists the biggest companies in the world.
The NASDAQ is the second biggest stock exchange and lists predominantly technology companies. It has acquired a reputation with companies operating in the IT sector thanks to its origin as an elecronic trading platform.
There are other smaller exchanges such as the Philadelphia stock exchange or the Boston stock exchange but listing on one of them wouldn't provide the same amount of publicity and prestige as on the big two.
Being listed on a foreign stock exchange and in particular an American one comes with its share of caveats. One of them is the additiinal level of scrutiny a financial regulator like the SEC adds. It is in fact no easy matter and requires increased disclosure and compliance from the part of the firm.
Be it your first or second listing it will bring more disclosure requirements than you are used to to meet the rules set by the SEC and the US government. Investors are also accustomed to different business practices.
A second disadvantage is the obligation to meet US accounting standards and publish financial statements abiding to the US GAAP. This necessity will likely come with increased expenses as you hire a competent team or outsource the whole process.
Exchanges also ask for minimum requirements before allowing a company to list its shares. NYSE offers four distinct set of requirements with public market value starting as low as $3 million for firms recording at least $750,000 in income before tax, the first figure rises to $15 million otherwise. The NASDAQ is on an equal footing and offers the same conditions.
In addition to financial disclosure and selection requirements there are listing and yearly costs that vary from an exchange to another. The NYSE is the most expensive with a one time fee of $250,000 and a yearly fee capped at $500,000 while the NASDAQ hovers between $50,000 and $75,000 upon entry and $27,500 per year which makes a big difference for smaller firms. The fees vary according to the number of shares floated on the exchange.
All in all having a presence in the united states is a step to a deeper access to the American market which is one of the biggest in the world. The added publicity and coverage by the media and analysts can bring a broader overture towards the general public for the company and its products. Especially if the company and the stock are doing well. Above average profits draw the eyes as much as successful marketing campaigns.