What Is Dual Listing

Dual listing occurs when a company’s shares are listed on two different stock exchanges, often across countries. This allows the company to access a larger pool of investors and improve its visibility in global markets. Unlike cross-listing, where shares are issued on one exchange and traded elsewhere through instruments like depository receipts, dual listing involves shares being simultaneously available on multiple exchanges.

Dual listing allows a company’s shares to trade on two recognised exchanges at the same time. The process usually involves:

• Primary Exchange: The company lists shares on its home market exchange, such as the NSE or BSE.
  

• Secondary Exchange: The same company lists shares on another exchange, often in a foreign market like the London Stock Exchange.
  

• Compliance: The company must adhere to disclosure and governance rules of both exchanges.
  

• Trading: Shares can be bought and sold by investors in both regions, though prices may differ slightly due to currency and demand factors.
  
  

Example: Suppose a company lists its shares on NSE at ₹500 per share and simultaneously on LSE at £5. Prices may not match exactly because of currency differences and local investor demand, but they represent the same equity.

Dual listing provides several benefits:

• Wider access to international investors.
  

• Increased liquidity as shares trade in more than one market.
  

• Increases visibility in the market.
  

• Easier access to capital at competitive costs.
  

• Reduced dependency on a single market’s sentiment.
  

This broader presence can allow companies to reach investors in multiple markets.

While beneficial, dual listing has challenges:

• Higher compliance requirements across multiple jurisdictions.
  

• Increased administrative and regulatory costs.
  

• Liquidity may split between exchanges, reducing trading volumes in one market.
  

• Exposure to multiple sets of rules and potential conflicts.
  

• Risks of exchange rate volatility affecting share pricing.

Companies must weigh these costs before pursuing a dual listing. 

Several global companies are dual listed. For example:

• Unilever: Listed in both London and Amsterdam, trading in GBP and EUR.
  

• BHP Group: Formerly listed in Australia and the UK before unifying shares.
  

• Rio Tinto: Shares listed in London and Australia.
  

In the Indian context, true dual listing is currently restricted, but policymakers have debated its introduction. Indian companies often use Global Depository Receipts (GDRs) or American Depository Receipts (ADRs) to access overseas markets instead.

In India, true dual listing is not currently permitted. Instead, Indian companies raise overseas capital through American Depository Receipts (ADRs) and Global Depository Receipts (GDRs). The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) regulate such foreign issuances.

Policy discussions have been ongoing to allow Indian companies to list directly on foreign exchanges and foreign firms to list in India, but a comprehensive framework is still pending. For now, Indian companies can only pursue secondary listings abroad via depository receipts.

Dual listing enables companies to increase visibility and access a wider pool of investors by trading on two different exchanges. For example, if an Indian company lists its shares at ₹600 on NSE and also trades at £6 on LSE, investors in both regions can participate, though prices may vary due to currency and demand differences. While this model affects liquidity and extends market access, it also involves compliance and cost challenges. In India, such direct listings are restricted, but discussions on reform suggest it may become possible in the future.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.