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  • Writer's pictureCarsted Rosenberg

Trading Domestic EU Shares in the US without a Dual-Listing

If you are a publicly traded company outside the United States, did you know US investors can buy your ordinary shares directly from their US account? We will take a look at how it works in this simple guide.

The Initial Public Offering

Ordinarily, if a European company decides to be listed on a stock exchange, it will look to its domestic stock exchange for an IPO. This makes sense, as it is incorporated in its home jurisdiction and known to the potential investors who will buy shares in the company. It knows the laws and regulations, it publishes its accounts in accordance with the domestic rules, and it is well-placed in the domestic market to have a successful IPO. The company will likely have its shares listed in its domestic currency, be it EUR, GBP, DKK, SEK, or NOK. At the time of the listing, the advising investment bank and book-runners will likely have placed all the shares with the eager investors. Depending on the business of the company, a number of international investors may have also acquired shares in the company and so, trading begins.

The Problem

The larger institutional shareholders will usually have access to acquire shares in the company directly from the domestic stock exchange and will be happy to invest in EUR, DKK, or any other domestic denomination. However, many smaller and mid-sized institutional and professional investors in the United States will not have direct access to buy shares in the company from its domestic stock exchange. These investors may be smaller banks, pension funds, family offices or active private investors. They will therefore have to go through a broker with access who will place their orders for them in the local denomination.

The Complex and Expensive Solutions

For some listed companies, it is important to ensure that they have access to a wider investor pool. This may be because they realise that their shares will benefit from a higher trading volume, or because they realise that their shares a valued higher by analysts outside their home jurisdiction. They may therefore look at a potential dual listing, where they would have shares listed on their home stock exchange and simultaneously on an international stock exchange, maybe in a different currency such as USD. This is both an expensive and an exhausting process to go through for the company. Alternatively, the company may begin looking at ADR, American Depositary Receipts. ADRs are negotiable certificates issued by a US depositary bank that represent one or more shares of an overseas company’s shares that are in fact listed outside the US. This allows the ADRs to be traded on US stock markets as any domestic US shares would without the overseas company being dual-listed in the US. This provides American investors with access to purchase shares in overseas companies that would not otherwise be available on ordinary American exchanges. Moreover, it enables overseas companies to attract American investors and capital without the hassle and expense of listing directly on an American stock exchange.

The Simple and Cost-Effective Solution

This is where OTC Markets comes into the game and provides a simpler and more cost-effective solution. A foreign company can remain listed on its domestic stock exchange and have its shares traded in the US without going through an expensive dual-listing or resorting to an expensive work-around such as ADRs. Here is how it works:

The easy solution for the overseas company is to be traded on the third-largest marketplace for shares in the United States, after New York Stock Exchange and Nasdaq: The OTC Markets Group operates two markets for companies that are already listed in their home jurisdiction on an approved stock exchange, OTCQX for larger and established companies and OTCQB for younger and emerging growth companies. Provided an overseas listed company meets the stringent financial and regulatory requirements, it can be admitted to trading on the markets operated by OTC Markets. Once admitted to trading, the shares of an overseas company will the traded in the US, denominated in USD, and traded during US trading hours.

This means that if a US investor seeks to purchase shares in an overseas company, it can do so in the US during US trading hours. When a buy order has been placed with an American OTC Market Maker, the order will be settled in the company's domestic market and in the original currency once the local markets reopen. The US investor will hold the shares directly without having to go through an ADR. The OTC Market Maker will have handled and settled the transaction and fulfilled the order for and on behalf of its US client. The US shareholder will be able to follow the company through the US ticker symbol issued to the overseas company in connection with the admission to trading. Note that it is an admission to trading, it is not a listing, as this is a regulated securities marketplace and not a stock exchange in itself, as the home stock exchange is considered the stock exchange for all intents and purposes.

The Benefits for the Company

What does this mean for the overseas company? It means that it now has access to US investors as domestic shareholders without having to seek a dual listing nor to establish an ADR in the US. The shares of the company will on average experience a marked increase in US ownership, higher trading volume in its domestic market, price increase of around 450 basis points, and raise its profile among US investors. In short, by remaining listed on its domestic stock exchange, it now has the benefit of the equivalent of a dual-listing or ADR without the cost or administrative burden.

If you go to market with an IPO, you better double down and go OTC as well.

Going forward, the company can reuse its domestic stock exchange notifications in English, by having them relayed to the US via OTC Markets News Service, it will therefore not have to suffer an increased investor relations and compliance burden. Moreover, the overseas company remains regulated by its home stock exchange and its home financial regulator. It will not have to separately register and report to the SEC, the U.S. Securities and Exchange Commission. Provided it is compliant with its home regulator and its domestic stock exchange, it will be considered compliant for OTCQX purposes. The reason for this is that while the shares will be traded in USD in the US via a US Market Makers, actual settlement will take place in its home jurisdiction and on its domestic stock exchange. It will in essence list local and trade global.

The Key Take-Aways and Research

The benefits for overseas companies that chose to become admitted to trading on OTCQX or OTCQB have been independently reviewed by Oxford Metrica and set out in their research paper which confirms the benefits for issuers quoted on the OTCQX and OTCQB markets in the period after admission to trading:

  • 450 basis points (bps) gain in value for OTCQX issuers and 290 bps gain for OTCQB issuers.

  • 470 bps value enhancement for international issuers on the premium tiers OTCQX and OTCQB

  • 28% increase in home market liquidity and an OTC Market increase of 37% after joining the OTCQX Market.

  • Tightening in the spread ratio for international OTCQX issuers.

More research papers and insights can be found here.

Webinar Recording and Further Information

If you would like to dig deeper into this topic, we invite you to view a replay of a recent webinar and panel discussion on how overseas companies can access the US capital markets. The video is available for direct streaming here:

For more information on the options to access the US capital markets via OTC Markets once a company has been listed on a domestic EU stock exchange, please consult our guides set out below for more detail.

Who can I contact to move this forward?

If you want to know more or want to obtain US market entry via an OTCQX quotation, please contact any of Michael Rosenberg or Andreas Tamasauskas at Carsted Rosenberg to discuss how we can move your transaction forward. As an OTCQX Sponsor, we are here to help you.

To learn more about the OTCQX Market, contact VP, International Corporate Services Joe Coveney at for Nordics and VP, International Corporate Services Jonathan Dickson at for DACH. To learn more about how OTC Markets create better informed and more efficient markets, visit OTC Link ATS is operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.

This briefing is intended to provide general information for European and other foreign issuers related to joining OTCQX or OTCQB markets. It is not intended to provide definitive legal or tax advice. No legal, tax or business decisions should be based solely on its content. The briefing does not necessarily deal with every important topic and is not designed to provide legal or other advice. It shall not be used as a substitute for legal advice and none may be inferred. It is only intended for general information on matters of interest. While we endeavour to represent the information as accurately and correctly as possible, we cannot accept any responsibility for any errors or omissions.


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