Cost of Capital
The easier it is to sell a stock, the more liquid the investment. Stocks in public companies are far more liquid than in private companies for both legal and practical reasons. The liquid characteristic of public company’s stock motivates buyers to pay more for that stock than they would if the company was private. Other reasons to consider going public include prestige, ability to use the company’s stock as currency in mergers and acquisitions, ability to attract employees with stock options and stock grants.
Downside of listing in US
Reasons why a major European stock
exchange is better than OTCBB
Are European stock exchanges better
2. No Naked Short Selling in Germany. It was completely banned in Germany by mid 2010. Some critics blame short sales as a major cause of market downturns, such as the crash in 1987 and 2008. When short sellers manipulate stock prices, usually on the OTCBB and Pink Sheets, by taking naked short positions and then using a smear campaign on chat rooms to drive down the target stocks, a huge damage could be caused to the company's shareholders. The problem on the OTCBB and the Pink Sheets should not be underestimated. To many stock's listed on the OTCBB are trading in the sub-penny range.
3. Fast Time to listing. A listing on the Frankfurt, Stockholm, or Stuttgart stock exchanges would be much faster than any American listing. Time is money! Waiting six to twelve months to become listed on the OTCBB or Pink Sheets does take to much valuable time. A listing on a European stock exchange could take as little as 6 weeks from scratch.
4. No Sarbanes-Oxley. Two separate studies, one conducted by a group of executives and academics, and another by McKinsey and Co. for New York Mayor Michael Bloomberg and New York Senator Charles Schumer, have come to the same conclusion; Excessive regulation has made the U.S. stock exchanges (including the OTCBB), a less-than-favorable place to go public, and singles out the Sarbanes-Oxley Act, as the main reason. The requirements of Sarbanes-Oxley are extremely costly for listed companies. Since passage of the Sarbanes-Oxley Act, many U.S. companies have found the ongoing expense to be reason enough not delist on US Stock Exchange's.
5. The OTC Bulletin Board is not an official stock exchange.
Frankfurt, Stockholm and Stuttgart stock exchange's are official stock
exchange's. OTC Bulletin Board listed securities are traded by
broker-dealers who negotiate directly with other brokers. OTC stocks
are considered “penny stocks” by licensed brokerage firms, and SEC
rules require that all purchases of such stocks must be unsolicited by
their clients. This literally prohibits brokers and their firms to
lawfully solicit their clients to purchase OTC securities. This limits
the liquidity to develop as del as in Europe. Unlike the
OTC-markets, the German and Swedish stock exchange's are
internationally recognized, just like NASDAQ or NYSE. Frankfurt Stock
Exchange is now considered the most internationally accepted exchange
in the world, with more than 80 countries listed.
The worldwide electronic securities trading system Xetra is the newest and most versatile stock trading platform in the world. It is one of several reasons why companies are switching to the Frankfurt Exchange. This software platform is continually scanning the market for suitable buyers and sellers faster than the New York platforms. Furthermore, it is the fastest in detecting irregular buying patters and issues "alerts" when such things are found. By end of 2010, more than 65% of the total trades were from countries outside Germany, with 22% from US investors and 24% of from UK investors.
6. The Frankfurt Stock Exchange has direct access to greater than 1/3 of the worlds investment capital. The Frankfurt Stock Exchange receives massive exposure to investor capital with more than 250 international trading institutions and more than 4,500 traders worldwide. Investors directly connected to the Frankfurt Stock Exchange represent a full 35% of the world’s investment capital. This means that a listing on the Frankfurt Stock Exchange gives companies access to greater than 1/3 of all the investment capital on the global market arena.
7. The Frankfurt Stock Exchange has the highest liquidity from all exchanges in Europe, including the London and Paris Stock Exchanges. Market liquidity and trading volume on the Frankfurt Stock Exchange comes third in the entire world.
8. Cost for a German/Swedish listing is considerably below an OTC-market listing. The Sarbanes-Oxley Act has created very high listing costs for trading on the OTC-markets. Cost for a listing on the Frankfurt Stock Exchange are small in comparison.
In conclusion Frankfurt, Stockholm and Stuttgart offers less cost, better liquidity, and greater access to capital. Call us today to discuss a listing of your company.
Call Now 1 416 444-4001, 1 313 918 1320, +46 40 644 4636