Dual-listed stocks: what they are and why there's a price gap between Tel Aviv and Wall Street

Dual-listed stock It's a share of a single company that trades on two exchanges — in our case, usually in Tel Aviv and on Wall Street. Teva, Elbit Systems, Tower, Nova and Nice are well-known examples. The same security trades in both places, so the price in Tel Aviv (in shekels) and the price in New York (in dollars, multiplied by the dollar exchange rate) should be very close.

Close — not identical. The gap between them is usually small, but it exists, changes every day, and sometimes reaches a few percent. The guide explains how it's calculated and where it comes from.

How to compare the two prices

Take the stock price in New York in dollars, multiply by the dollar-shekel exchange rate, and multiply by 100 to convert to agorot. Compare the result to the price in Tel Aviv. For example: if Teva closed in New York at 41.11 dollars and the exchange rate is 3.10, the equivalent price is about 12,744 agorot. If in Tel Aviv it closed at 12,930, it traded at a gap of about 1.5% above New York.

In some companies, the US security represents more than one share (ADR ratio). For all the stocks in our table, the ratio is 1:1 — we checked this against actual prices.

Where the gap comes from

• Different trading hours: Tel Aviv closes at 17:25 and New York at 23:00 Israel time. What happened on Wall Street after Tel Aviv closed only shows up in New York's closing price — and that's the main source of the gap between the closings.
• Dollar exchange rate: It moves constantly, and so does the equivalent price in shekels.
• Liquidity: In most dual-listed stocks, trading volume in New York is much larger, so the price there is usually the 'leading' one.
• Costs: Fees, foreign currency conversion and taxation differ on each side — which allows a small gap to persist without anyone closing it.

Why the gap tends to close, and the cost of assuming it will close

When the gap is larger than the costs, those operating in both exchanges have an incentive to buy cheap and sell expensive — which brings the prices closer. So an unusual gap relative to the stock's average tends to narrow. 'Tends' isn't 'always': the gap can widen before it closes, and the closing can come specifically from a move in the New York price rather than Tel Aviv.

That's why what matters isn't today's gap alone, but the gap relative to that stock's normal range. InGap table for each stock we show today's gap, the average over the last 20 trading days and their range, and in the morning — where the dual-listed stocks closed in New York before the Tel Aviv open.