Why might a company want its stock listed on a stock exchange outside of its home country? The former brash upstart exchange, the first to process transactions electronically, has now taken its rightful place as the NYSE's equal - and even its superior in some respects. As such they are expected to comply with the rules of the markets they populate. In addition, Nasdaq's listing fees are smaller than those of the NYSE. So where was there to go from the NYSE?
Advantages of the NasdaqNasdaq. A stock split is when a company divides the existing shares of its stock into multiple new shares to boost the stock's liquidity. Sometimes, it makes prudent business sense. It must also be completely transparent in all business dealings and in the reporting of financial data, because a publicly listed company is subject to regulations it might otherwise be exempt from. The American Stock Exchange (AMEX), now known as the NYSE American, was once the third-largest U.S. stock exchange and dates back to the 18th century. Summarizing the NYSE's publicly announced reasons for its decision, Qiao Xing's CFO quit for undisclosed reasons. The bottom line? In short, to lose your privileges, you've almost have to want to be delisted.The Bottom LineDuring Nasdaq's nascence, the NYSE proudly kept its fees high and its barrier all but insurmountable. If you think you'd like to have your bakery or dry cleaning business listed on the exchange, you have a lot of work to do.New entrants to the NYSE (or companies spun off from larger, existing companies) need to do an initial public offering (IPO) of at least $100 million. (Ld) Kraft had already announced that it was ready to separate into two companies - one concentrating on North American grocery brands, the other on snack foods sold across the globe. The few tens of thousands of dollars Kraft will save on said fees aren't necessarily enough to warrant a switch on their own, but coupled with Nasdaq's promotion and brand building, they are.
SEE: Getting To Know The Stock ExchangesDelistingWhile every stock exchange upholds a set of standards for being listed, and will delist companies that no longer qualify for inclusion, stock exchanges don't particularly enjoy delisting stocks. Qiao Xing fell from grace and made a soft landing on the over-the-counter markets, the untamed frontier of public trading, where requirements barely exist.SEE: The Dirt On Delisted StocksChanging ExchangesBut moving from the NYSE to another exchange isn't necessarily a step down. The Over-The-Counter Exchange of India (OTCEI) is an electronic stock exchange based in India that is comprised of small- and medium-sized firms. If the stock stays under the $1 barrier for a month, it's in danger of being delisted and being forced to look for a less demanding exchange on which to trade. The company's public accounting firm also quit, a detail that Qiao Xing also kept to itself for some reason. Delisting is the removal of a security from a stock exchange. The NYSE goes to great lengths to remind everyone that meeting all its criteria is a necessary condition for being listed, not a sufficient one.2,308 companies currently trade on the NYSE, a number that never stays constant. In most cases, the exchanges will do everything in their power to prevent a stock from being kicked out.For instance, Nasdaq sets a $1 minimum price for a stock to remain listed. A $69.5 billion company, Kraft has been profitable for years and shows no signs of slowing down. If it were, would a company ever willingly leave the Big Board and go elsewhere?SEE: The NYSE And Nasdaq: How They WorkRequirementsFor the most part, when a company switches exchanges, it's less an action than a reaction. The ability to have the company's shares traded in the stock exchange is fundamental to an organization's decision to have the company listed. “There is usually a capital target, with a set number of shares available to reach that target.” A stock symbol is a unique series of letters assigned to a security for trading purposes. Look at the NYSE. However, in today's world, where capital flows across the globe in milliseconds, is an NYSE listing still as meaningful as it used to be? It sends a message that makes the exchange look like it was lax by letting certain companies join its roster in the first place. There are two methods that companies can raise capital - equity and debt. Being listed on the NYSE gave your company the cachet that a seat on San Francisco's Pacific Stock Exchange or the Spokane Stock Exchange … )We see that prestige manifest itself today - the pomp, merriment and photo opportunities that accompany the trading day's opening and closing bells. If a company's stock falls below that threshold - technically becoming a penny stock, with all the negative connotations that implies - the clock starts ticking. “The main reason a company lists on a stock exchange is raise capital to grow the business,” says EasyEquities brand manager Romi Appel. Its requirements for joining are as stringent as ever. And once a company qualifies, that doesn't mean anything in and of itself. Over-The-Counter Exchange of India (OTCEI). (Again, with plenty of other requirements to meet.) Even then, the company will typically have six months to get its stock price over $1. Listing or Stock Exchange Listing, as many people call it, is the process of making a transition from a private organization to a publicly-owned entity wherein all or some shares of the company can be traded in the stock exchange. After all, too much exclusion is bad for business. Companies don't elect to leave so much as they're asked (or gently persuaded, or ordered) to. Most stock exchanges require companies to file an annual re- port and specify the accounting rules that must be followed in preparing financial statements. Once the split becomes official, it'll be easy for both Kraft's successor company and its designated spinoff to both be listed on Nasdaq. The NYSE asked for disclosure, and Qiao Xing was not forthcoming. While the NYSE might have cost itself an opportunity, years later it continues to err on the side of exclusion (as does Nasdaq, only to a lesser extent). Regulations pertaining to foreign companies can differ from those for domestic companies. That's in addition to plenty of other criteria an NYSE hopeful has to meet. Companies list on the stock exchange as a way to raise capital. Decades ago, a seat on the New York Stock Exchange represented the pinnacle of business achievement, though to some degree this still holds true today. Burgeoning young companies (most famously Microsoft) had neither the wherewithal nor the inclination to pay gigantic fees when a suitable alternative was available. The offers that appear in this table are from partnerships from which Investopedia receives compensation. 8. A company can list its shares on more than one exchange, which is referred to as dual-listing. But have you ever stopped to consider why a company would list on the stock exchange in the first place? Being listed on the NYSE gave your company the cachet that a seat on San Francisco's Pacific Stock Exchange or the Spokane Stock Exchange just didn't offer. Take the case of Kraft Foods, which until last month was not merely an NYSE member but had spent the last three years at the pinnacle of the exchange: Kraft was one of the 30 components of the Dow Jones Industrial Average, which remains the definitive bellwether of the market. Moreover, even at that point, should the stock have failed to reach $1 for 10 consecutive business days, the company can appeal its delisting. For instance, your company's aggregate pre-tax income for the last three years has to be at least $10 million. Listing a company on the stock exchange requires it to follow the rules of the exchange. As do Amazon, Google, Facebook and other titans of commerce too numerous to mention.Kraft joined the party uptown for several reasons, but primarily for the effect doing so had on the company's bottom line. Listing requirements are the minimum standards that must be met by a company before it can list its shares on a stock exchange. The largest and most profitable company on Earth, Apple, trades on Nasdaq. (Reinforcing the point, both of those exchanges are now defunct. Or if you're lacking there, the NYSE will be happy to consider your company's application if your global market capitalization is $150 million. Companies on AIM have to use the services of a nominated advisor (known as a Nomad), a firm or company which has been approved by the London Stock Exchange, who effectively acts as the regulator of the business, managing its listing and ensuring its ongoing compliance. To cite a timely example, one of the latest victims to fall off the board is Qiao Xing Mobile, which manufactures cheap phones. A shrewd company cares less about stature than it does about which exchange is the best fit. It became a win-win: Microsoft gained prominence on the Nasdaq, while the junior exchange gained credibility by having such a huge, growing company on its board.