Listed Security

Key takeaways
* A listed security is a financial instrument—stock, bond, or derivative—traded on a regulated exchange.
* Issuers must meet an exchange’s listing requirements and ongoing disclosure obligations.
* If an issuer fails to comply, the security can be delisted and may trade over the counter (OTC).

What is a listed security?

A listed security is any financial instrument that is registered for trading on a formal exchange (for example, the New York Stock Exchange or Nasdaq). Listing makes securities accessible to public buyers and sellers and provides liquidity, price discovery, and standardized trading rules.

How listing works

Issuers follow a sequence of steps before and after listing:
* Choose an exchange and market tier.
* Prepare documentation and financial statements.
* Register with the relevant regulator (e.g., the SEC in the U.S.).
* Meet the exchange’s initial listing criteria (capitalization, share price, shareholder count, governance standards, etc.).
* Conduct an initial public offering (IPO) or follow another approval path.
* Begin trading on the secondary market and maintain ongoing reporting and compliance.

Failure to meet ongoing requirements can lead to delisting. Delisted securities may continue trading in the OTC market, which does not impose the same listing standards.

Types of listed securities

• Stocks — Equity shares issued by companies. Listings usually begin with an IPO; afterward shares trade on the secondary market, enabling broad investor participation and liquidity.
• Bonds — Debt instruments issued by governments or corporations. Bondholders receive interest and repayment of principal according to the bond’s terms.
• Derivatives — Contracts (options, futures, etc.) whose value derives from an underlying asset. Many derivative contracts trade on exchanges under standardized terms.

Listing requirements (overview)

Requirements vary by exchange and market tier but commonly include:
* Minimum market capitalization and shareholder equity.
* Minimum share price and a required number of public shareholders.
* Corporate governance standards and periodic financial reporting.
* Payment of listing fees.

Examples: NYSE vs. Nasdaq
* NYSE — Applicants select a specific NYSE market (e.g., NYSE, NYSE American, NYSE Arca), reserve a ticker, apply, pay fees, meet market-cap and shareholder thresholds, and designate a market maker (DMM). IPOs typically require underwriter assurances.
* Nasdaq — The process includes reserving a ticker, submitting an application and listing agreement, providing governance certifications, and paying fees. Nasdaq operates multiple tiers (Global Select, Global Market, Capital Market) with differing financial and liquidity standards. Listing costs on Nasdaq are often lower, which can appeal to newer companies.

Cross-listing

Companies can list the same securities on multiple exchanges to increase visibility and access to additional investor bases. Each exchange’s listing rules must be satisfied separately.

Delisting and OTC markets

Delisting occurs when a company fails to meet listing standards or voluntarily withdraws. Delisted securities may trade over the counter (OTC) where listing requirements are minimal; OTC-listed firms tend to be smaller and less liquid and carry higher trading and informational risks.

Why companies list

Primary reasons for listing include:
* Raising capital through public equity or debt offerings.
* Increasing liquidity for existing shareholders.
* Enhancing corporate profile and credibility.
* Enabling use of publicly traded stock for acquisitions and employee compensation.

Pink sheets

“Pink sheets” refers to historic OTC quotation services for stocks that do not trade on formal exchanges. Such securities typically do not meet exchange listing standards and are subject to lower transparency and higher risk.

Major exchanges

The New York Stock Exchange and Nasdaq are the largest U.S. exchanges by market capitalization of listed companies, followed by major international exchanges. Exchange choice can affect perception, cost, and investor access.

Bottom line

A listed security is a publicly traded instrument subject to an exchange’s listing and ongoing disclosure requirements. Listing provides liquidity, access to capital, and market visibility, but also imposes regulatory obligations and costs. Companies and investors should weigh the benefits and responsibilities associated with exchange listing.