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Definition: Primary Listing
Primary listing is a term referring to the main exchange in which a company has listed itself. A stock can trade on multiple exchanges but it has only one exchange where it is primarily listed which is called primary exchange for the company. Generally for companies listed on multiple exchanges, the exchange where the company’s market capitalisation is highest is called as its primary listing. The main reasons for a company opting to list is that when a company decides to go public, it is required for the company to be listed and listing provides access to investors and a platform to showcase its performance and credibility so as to attract them. For investors, it serves the purpose of providing a fair price for the company as the large number of buyers and sellers will mean that the price at which the company is traded will be very close if not equal to the intrinsic value.
1. Having a primary listing on world renowned exchanges such as New York Stock Exchange (NYSE), NASDAQ, Euronext etc. increases the company’s credibility and brand image by putting the firm alongside world’s best known companies
2. Superior trading efficiency of global exchanges implies that bid-ask spreads are very low which in-turn attracts more investors
3. Access to some of the deepest markets such as the US stock markets means that the visibility also increases which means that the company can raise capital from more number of investors and thus liquidity also increases
4. Listing on exchange such as NYSE also means that the company has to follow some of the strictest regulations in the financial world which increases trust for the company among the investors
Listing requirements vary from exchange to exchange. The main requirements of NASDAQ OMX are given below: