Dually Listed Securities - Frankfurt Exchange - Frankfurt Exchange Quotes

As part of our expansion we are going to be offering our client base and future clients

a dual listing on the OTCBB in the United States and the dominant European exchange, Frankfurt Exchange in Germany.

We have been fielding inquires from clients with one common question, "What is the advantage of two listings?" here is the response from one of our European partners:

If the stock price is $1 on the otcbb it is a similar price on the FSE in . The IR campaign would be reflected in that way if you have strong buying in the US and Canada, the European market maker has also to fill the bid. Which means that the stock price will also go up on the FSE. You can attract much more investors and build a bigger shareholder base with the right IR program if you are dual listed. Which means you can attract a much bigger market with the stock.

The most common reason for companies to opt for this is the need to list in two different countries. This may happen because of:

A merger of companies listed in different countries or,

A new listing to gain access to capital from a larger market

The second is, typically companies that are already listed in their home country which, as they get bigger, find it useful to have access to the larger amounts of money they can raise in larger markets. In the interests of their existing (home country) shareholders they need to retain their original listing.

Advantages to Investors / Shareholders

As mentioned earlier, the major advantage is that the shareholders can buy and sell shares of both the companies on bourses in the two countries. That means, when a company's securities are listed on more than one exchange for the purpose of adding liquidity to the shares and allowing investors greater choice in where they can trade their shares. It contributes to the liquidity of the shares listed. This enables investors to have a greater choice as to where and when they can trade their shares. A significant apparent advantage of a dual-listed structure for companies is the benefit of scale and access to foreign capital.

It is not a widely used technique, although it is thought to improve the spread between the 'bid and ask' price which helps investors obtain a better price for their securities.

From the shareholders' perspective they can buy and sell shares of both the companies on the stock exchanges in the two countries.

A structure would also remove the time-consuming requirement for the companies to take regulatory approvals from the various countries in which they operate should they go in for a conventional merger.

by: James Scott.

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