If a company is listed on two separate exchanges the prices are kept similar by arbitrage opportunities. However Harmony Gold trades at $0.953 on NYSE and 1616 south african rand on JSE. The exchange rate for rand to dollar is 1 rand to $0.065. Hence 1616 rand gives $105.04. How is this possible? Couldn't I make a ton of cash off this by buying as many shares as possible on NYSE and selling on JSE?

  • 3
    As noted in my answer, you have the units wrong. Prices on JSE are quoted in cents of rand, ZAc, rather than in rand, ZAR. That cuts the price difference by a factor of 100 and puts them pretty close. More on what remains of the difference in my answer.
    – user32479
    Dec 29, 2015 at 16:52
  • There is technically no requirement for the prices to be equal across exchanges. The value of a good is equal to what people will pay for it. These types of occurrences are known as market inefficiencies and some people do actually make money off it (though generally not in this way). That being said, its not as simple as just buying on NYSE and selling in JSE because the commission of the buy/sell and the commission on the FX rates, plus taxes are really going to eat into your profits Dec 29, 2015 at 18:14

2 Answers 2


The quotes on JSE are for 100 share lots. The quotes on NYSE are for single shares. That still leaves some price difference, but much less than you calculated.

(EDIT: Equivalently, the price is quoted in 1/100th of a Rand. The Reuter's listing makes this explicit since the price is listed as ZAc rather than ZAR. http://www.reuters.com/finance/stocks/overview?symbol=HARJ.J)

As noted in the other answer currently up, NYSE is quoting American Depositary Receipts (ADRs) for this company, which is not directly its stock. The ADR in this case, if you check the prospectus, is currently 1 share of the ADR = 1 share of the stock on its home market. A US institution (in this case it looks like BNY Mellon) is holding shares of stock to back each ADR.

Arbitrage is possible and does happen. It's not perfect though, because there are a variety of other cost and risk factors that need to be considered. There's a good review here:

Report by JP Morgan

Some summary points:

  • Some markets are more easily traded internationally, so there may be some difference in supply / demand that sustain short-term differences in prices.
  • There can be perceived risk about the ability to actually execute the arbitrage (or, if you prefer, the exchange of ADR for stock) if one country's market in the pair is considered less stable
  • There's currency exchange costs and risks, so executing the arbitrage is not a simple as just doing calculation of exchange based the current market rates for currency.

On NYSE it isn't the equity which is listed but is an ADR(American Depositary Receipt).


A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction.

Else people would make a killing on the arbitrage opportunity. Frankly speaking arbitrage opportunities are more or less non existent. They occur for maybe seconds or milliseconds and the HFT firms and banks trade on it to remove the arbitrage.


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