Latin American Capital Markets

178 RUBEN LEEListingThere are many reasons why a company may choose to obtain a listing outside itshome country: 22• To obtain cheap financing• To improve liquidity for its shares 23• To enhance or improve its corporate visibility and status• To support the implementation of corporate strategies• To alleviate market segmentation• To develop a broad shareholder base• To obtain good analyst coverage of its stock• To obtain high standards of regulation• To reduce political riskHistorically, once a company satisfied an exchange's listing requirements,namely certain minimum initial and ongoing standards for investor protection, thecompany was said to be listed on the exchange, and its shares would be traded onthe exchange's trading system.This is still the situation in many jurisdictions. Howevenin some jurisdictions, a distinction has arisen between a security being admitted to listingand to trading. In these jurisdictions, admission to listing refers only to the processof being listed in accordance with the relevant legislation, namely satisfying the minimuminitial and ongoing requirements, under the supervision of a designated listingauthority. Such an authority may be an exchange, as was normally the case in the past,or it may be a regulator distinct from any exchange. Admission to trading, in contrast,refers to the process by which an exchange or other form of trading system choosesto let a particular security be traded on its dealing mechanism.This is not a regulatorydecision and remains the responsibility of exchanges and trading systems. In the jurisdictionswhere this distinction has arisen, an exchange can admit securities to tradingwhile not being in charge of admitting them for listing. In a regional context, a keyquestion concerns whether an exchange in one jurisdiction can admit securities fortrading that are admitted for listing in another jurisdiction.Most of the benefits to a company of listing abroad can be obtained in a regionalenvironment in which listing authorities (exchanges or nonexchange regula-22 Baker and Johnson (1990); LSE (1999); NYSE (1999); and Pagano, Roell, and Zechner (2000).23 Foerster and Karolyi (1998); Smith and Sofianos (1997); Domowitz, Glen, and Madhavan (I998a, I998b).Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub