Stocks listed on both nasdaq and nyse

Anything that increases competition is almost always good for consumers, but the move toward listing stocks on multiple markets is unlikely to yield immediate benefits for ordinary investors and could cause some confusion in the short run. On Monday, six companies listed on the New York Stock Exchange said they will list their stocks on Nasdaq as well. Three of the firms -- Charles Schwab, Hewlett-Packard and chip designer Cadence Design Systems -- are based in the Bay Area.

A fourth, Countrywide Financial, is headquartered in Southern California. The others are Illinois drugstore chain Walgreen and Texas energy firm Apache. It may be more important to our friends back East. Dual-listed companies will not qualify for inclusion in the Nasdaq index or in the popular Nasdaq Index Tracking Stock, better known by its ticker symbol, QQQ.

To qualify for the Nasdaq , a company has to be listed exclusively on Nasdaq.

Dual-listed companies will use their same ticker symbols in both markets but could have different closing prices, which could cause confusion for some investors. For example, a mutual fund that owns dual-listed stocks will have to pick a closing price to come up with the net asset value, or daily price for its own shares. Vanguard Group says it will use the closing price on the market where most of a dual-listed company's shares trade. For other investors, the closing price will be determined by the rules that already govern pricing of stocks that trade in more than one market, says Edward Knight , Nasdaq's general counsel.

Today, about 20 percent of trading in NYSE-listed stocks occurs away from the NYSE. About 10 to 13 percent takes place on Nasdaq, with the rest on regional exchanges such as the Pacific or on electronic trading networks.

NASDAQ vs NYSE - Difference and Comparison | Diffen

Although there was no law or rule that prevented a company from listing its stock on the NYSE and Nasdaq, very few companies did so until now. Diamond Shamrock listed on both in the s, and a closed-end mutual fund did so in the s, says Knight.

Former NYSE Chairman and CEO Richard Grasso was said to rule the exchange with an iron fist. If the top executive of a listed company complained to Grasso about the way the specialist on the exchange floor was conducting trading in his stock, Grasso might intercede with the specialist.

A company that listed on a second market might not get the same favor. The NYSE also regulates its listed companies. Some executives might have worried they would get increased scrutiny if they took a dual listing. It's also possible the scandal over Grasso's grotesque pay, as well as the investigation into whether NYSE specialists were putting themselves ahead of investors, may have led some companies to seek a Nasdaq listing.

Until recently, "the specialist franchise was viewed very favorably. Now some of the Teflon is starting to fade. The eggs are sticking to the pan. People are trying to find another way to cook it," says Todd Clark , who heads trading in NYSE-listed stocks for Wells Fargo Securities.

In the past year, the percentage of Cadence stock traded off the NYSE has risen to 30 percent from 15 percent. Cadence interviewed some large shareholders about dual listing, "and we got quite a consistent thumbs up," he adds. Bingham and other executives of dual-listed companies I spoke with say buying a second home on Nasdaq could improve the liquidity of their stock.

Liquidity refers to how easily an investor can buy or sell stock without adversely affecting its price. Liquidity is influenced by the volume and value of the company's outstanding shares and the size of the individual trade. None of the executives could explain, exactly, how a second listing would increase their stock's liquidity, considering that stocks can already be traded in multiple markets and that traders are required to execute trades at the best price available on any market.

Fordham's Thel and Wells Fargo's Clark both say it's possible that liquidity could actually decrease if a company's stock trading becomes highly fragmented and the links between markets are not perfect. Schwab's Pottruck calls that argument "an old saw used by the New York Stock Exchange.

It's like saying that two auto factories will be less effective than one, so why should we have competition? But HP sees "limited downside and lots of upside," says Brian Humphries , an HP spokesman. The potential benefits of a dual listing include "shareholder choice, efficiencies, perhaps increased liquidity, perhaps increased transparency," says Countrywide spokesman Rick Simon.

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Competition created efficiency in the mortgage industry. Although the companies emphasize the benefits that would come from two listings, Nasdaq's Knight sees dual listing as a way for companies to evaluate moving to Nasdaq exclusively. An old NYSE rule made it next-to-impossible for a company to leave the exchange.

That law was relaxed in and relaxed again last year. Now a company needs only board approval to leave the NYSE. Even so, companies have moved to the NYSE from Nasdaq and only one has moved to Nasdaq from the NYSE, says NYSE spokesman Ray Pellechia.

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