For nearly 20 years, companies listed on the New York Stock Exchange (NYSE) have steadily transitioned to Nasdaq. This year marks a significant milestone for Nasdaq, with 500 companies, representing a combined market value of $2.7 trillion, making the switch.
Accelerating Momentum in 2024
In 2024 alone, 16 companies, including prominent names like SAIC and Campbell’s, have made the move, reflecting the growing appeal of Nasdaq as a listing destination. This trend signals a broader shift as public companies increasingly recognize the benefits of listing on Nasdaq.
Historical Context and Evolution
The trend gained momentum in 2003 when the Securities and Exchange Commission (SEC) implemented reforms, including the repeal of “Rule 500,” which fostered a more competitive environment for stock exchanges. In 2007, a further rule change allowed companies to retain their existing ticker symbols when switching exchanges, simplifying the process.
Over the past five years, listings transferring to Nasdaq have accounted for more than $1 trillion of the total $2.7 trillion in transferred market capitalization, according to J.R. Mastroianni, Nasdaq’s Head of Exchange Transfers and Listing Services.
Notable Transfers and Market Reach
- Diverse Sectors and Scale: The companies switching to Nasdaq represent 18 countries and 12 industries, with 32 companies boasting market capitalizations exceeding $20 billion.
- Major Names: The transitions include 40 members of the S&P 500, and 24 of these are now part of the Nasdaq-100 index. Campbell’s, the oldest company to transfer, and Linde, with the largest market cap transfer, highlight the breadth of Nasdaq’s appeal.
Why Companies Are Switching
According to Nasdaq, its competitive advantages include:
- Partnership Approach: Nasdaq emphasizes building strong partnerships with listed companies, offering advanced services for investor relations officers (IROs), CFOs, and boards.
- Cost Efficiency: Its fee structure avoids penalizing companies for growth, making it an attractive financial choice.
- Nasdaq-100 Inclusion: The opportunity to join the prestigious Nasdaq-100 Index provides a significant boost in passive investment opportunities.
- Modern Technology: Nasdaq has invested heavily in advancing its backend market structure and execution technology, enhancing stock trading and market efficiency.
Simplified Transition Process
Nasdaq’s commitment to a seamless transition has been a key factor in attracting companies. For example, during its listing transfer, Linde received hands-on support to ensure a smooth process. Juan Carlos Pelaez, Linde’s Vice President of Investor Relations, described the experience as “flawless,” with execution aligning perfectly with the company’s timeline.
SAIC CEO Toni Townes-Whitley, speaking at the company’s Nasdaq bell-ringing ceremony, emphasized Nasdaq’s innovative spirit. She noted, “When I think of innovation, I think of Nasdaq,” underscoring the exchange’s alignment with forward-thinking companies.
The Nasdaq Advantage
As the complexities of operating as a public company grow, Nasdaq’s modern approach, cost advantages, and innovative solutions make it a compelling choice. The exchange continues to position itself as a leader, attracting businesses seeking to optimize their public market strategies.
For companies considering a change, the message is clear: Nasdaq offers not just an exchange but a partnership for growth and innovation.
What a listing switch means for shareholders
When a company moves its listing from the NYSE to Nasdaq, very little changes for people who already own its shares. The shares stay in their accounts, and since a 2007 rule change, companies can usually keep the same ticker symbol. What changes is the exchange that handles trading in the stock, the fees the company pays and, in some cases, which indexes the stock can join. For example, only Nasdaq-listed companies can be part of the Nasdaq-100 index, which is tracked by large funds.
Why exchanges compete for companies
Listing fees, trading revenue and data sales are major sources of income for stock exchanges. A large company that switches can bring both fees and trading volume. That is why exchanges pitch services such as investor-relations tools, market data and marketing support. Companies, for their part, compare costs, brand image and how their shares trade on each venue.
How Indians can invest in US-listed shares
Indian residents can buy US stocks in two common ways:
- Through an overseas brokerage account, using the RBI’s Liberalised Remittance Scheme (LRS), which allows individuals to send up to $250,000 a year abroad for permitted purposes. Tax collected at source (TCS) may apply on remittances above the set threshold.
- Through Indian mutual funds or ETFs that invest in US indexes such as the Nasdaq-100 or S&P 500, which can be bought in rupees from an Indian demat or fund account, subject to any limits the funds have in place.
Gains on foreign shares are taxed in India, and you may also need to report foreign assets in your income tax return. Currency moves between the rupee and the dollar can add to gains or losses. Read how the rupee moved this month.
This article was first published in November 2024. Figures on transfers are as reported by Nasdaq at that time. This is not investment advice.
Questions to think about
- Does it matter to investors which exchange a company is listed on?
- Should Indian investors put part of their savings in US-listed companies?
- How do currency movements change the real return on foreign investments?
