Italian clothing retailer Benetton Group (NYSE: BNG) gained more than 8% yesterday, closing up $2.58 at $33.23 on news that Deutsche Bank upped BNG to Buy. While good news, this is not the biggest Benetton news. The Board of Directors of the company recently announced the company will voluntarily deregister and delist from the NYSE and will no longer offer American Depositary Shares (ADS) on the NYSE. The decision is not an indication that Benetton Group, known as much for its provocative advertising as for its fashions, is in any financial trouble. Far from it. The company recently issued first-half 2007 results that were positive all the way through the numbers. Revenues are up 10%, volume of sales is up 13% to 74 million garments. The company has benefited from a good product mix in its stores and the dollar's continued weakness against the euro.

What drove Benetton's Board of Directors to deregister and delist was the fact that the company simply does not do enough business in ADS to justify the expense of keeping a full set of books in compliance with the Sarbanes-Oxley Act. As Italian stock exchanges, particularly Milan, have grown more international in their offerings, American shareholders have begun to trade directly rather than through ADS. Benetton indicated it will still provide financial information and press releases in English, but will keep its books according to international standards.

Benetton senior management does not think delisting from the NYSE will have any adverse impact on the company's growth or earnings, which it forecasts to be in the 7-9% range.

The most troublesome aspect of Benetton's decision to delist may be the idea that foreign companies feel they do not need access to U.S. equity markets, still the biggest in the world. Perhaps the trading floor is leveling internationally. How many other foreign-registered companies are going to take a look at Benetton's decision and begin to do their own cost/benefit analysis on continued NYSE or Nasdaq listings?