Q: What is the Nasdaq International Designation?
Nasdaq International Designation is a new visibility offering available to international companies that don’t file with the SEC and have Level 1 ADRs or shares that trade on the OTC.
Q: Will the increased visibility of Nasdaq International help with liquidity?
Hopefully the Designation will help increase awareness with US investors and that these companies have shares that trade on the OTC in the US. By being a member of Nasdaq International these companies are showing they care about the US investors and are doing what they can to highlight the company with US investors. These companies are not ready to file with the SEC and gain a formal listing in the US, but want to be more visible with US investors. Designation companies can indicate on their IR/PR material that the US traded shares on the OTC have the Nasdaq International Designation. Designation companies can use our visibility assets to highlight themselves with investors: bell ringing, event space, and Times Square Tower advertising. The hope is that more visibility of the OTC traded shares will increase liquidity for those Level 1 ADRs.
Q: What are the filing and regulatory obligations of Nasdaq International?
The companies don’t have to file with the SEC. If they join Nasdaq International there is nothing more the companies need to do from a regulatory or filing standpoint. The Designation companies just need to continue to meet the program requirements and stay in good standing with their home regulatory market.
Q: Are there benefits outside the possibility of improved liquidity?
Yes, Nasdaq International gives credibility. For example, if a Hong Kong listed Textile Company decides to join Nasdaq International. This will help this textile company say it is truly a global company for both their customers and suppliers.
Q: Is there anything happening in the global markets currently that makes the Nasdaq International Designation more appealing?
The US market is by far the largest pool of investor capital in the world. Many international companies would like attract more US investor interest, and US investors like to invest in dollars. Additionally, this is an opportunity for investors to take advantage of the strong US dollar by investing in ADRs while taking advantage of growth outside the US.
Q: What happens if liquidity doesn’t improve immediately?
It might take time for liquidity to build with the increased visibility and additional company outreach to US investors. Member companies can easily see the initial value through our visibility assets or the creditability that comes with the branding of the Designation.
Q: Do you believe that the companies in the Designation will eventually seek a formal Nasdaq listing?
It is a possibility that Designation companies will see the program as a way to “test the waters” with the US investors before doing a formal listing in the US on Nasdaq. When we first came up with the idea of Nasdaq International this was not our intention, we were just trying to increase the visibility for Level 1 ADRs since we felt it was an underserved area for both the companies and investors. Some companies in the program might have interest in eventually filing with the SEC, but for others they feel they make the necessary disclosures in their home market and merely want to increase the awareness with US investors that they can invest in the company in US dollars through their ADRs.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Nasdaq's International Designation is a comprehensive platform for Level 1 ADRs and Canadian companies.Learn More