What is the difference between Listed vs Unlisted Stocks?
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- Updated On:26-May-2021
- Replies:7
Short Answer
Listed and unlisted are the two types of stocks in which listed can be described as the ones registered in stock exchanges while unlisted is not registered.
Detailed Answer
A stock is a type of protection that suggests the holder owns a certain percentage of the listed firm. Stocks are the backbone of virtually any portfolio and are purchased and sold mostly on stock markets, while private sales are possible. "Shares" are the units of stock. These activities must comply with government laws designed to protect stakeholders from deceptive practices. Organizations do not own investors; investors own shares issued by companies. There are two main types of stocks and those are:
- Listed stocks
- Unlisted stocks
Listed stocks:
- These are the stocks which are officially included in the stock exchanges i.e., NSE and BSE and open for the traders in the public.
- Traders can purchase or sell the shares in the stock market using a brokerage account or demat account.
- Only public companies are under listed stocks.
- It must abide to the broker's listing conditions, which may include the number of shares offered and a sufficient earnings ratio.
- These exchanges list the shares which are of high quality and are of high reputation.
- Such exchanges usually only allow high quality stocks to be traded because their reputation also plays a role in it.
- There are various requirements to be listed under stock exchange such as the number of shares to be issued, price of share, equity, etc.
- This also provides high liquidity and price of the shares are translucent.
- There are strict instructions to be listed in stock exchanges and all the rules are to be abided.
Unlisted stocks:
- These are the stocks which are not included in any sort of stock exchanges or IPO- Initial Public Offerings.
- These companies can be privately owned or public limited.
- They are only traded (purchase and sell) over the counter and not by any stock exchanges.
- They are even called OTC (over the counter) securities.
- These stocks are comparatively less liquid and instable when compared to listed stocks.
- Pink sheets or the OTCBB may be used to track unlisted stocks.
- Not being in stock exchanges, they cannot be in get public investors.
- The key benefit of investing in this unregistered sector is that you gain access to cutting-edge companies with a high degree of innovation.
- Some of the examples of unlisted stocks are: Hero FinCorp Limited, Reliance Retail limited, Suryoday Small finance bank.
Difference between Listed and Unlisted stocks:
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Discussion (6)
We can only invest in or trade in listed stocks, not unlisted stocks, because a listed company is one whose shares are publicly traded on a stock exchange, and an unlisted company is one whose shares are generally held by private members.
A listed stock is one that a company issues through an initial public offering so that its shares can be traded on exchanges. Unlisted stocks are those that are not traded on any exchanges and cannot be traded directly. If you want to trade an unlisted stock, you must do so over the counter.
Apart from the general differences between listed and unlisted stocks, there are some other conditions on the stocks of unlisted companies. If you purchase the stocks of an unlisted company, those shares will have a lock-in period of 1 year from the date of listing. This means you can only sell the shares on the stock market, after 1 year from the IPO of the stock.
Listed stocks can be traded while unlisted cannot. Which companies list their stocks?
Listed stocks can be traded while unlisted cannot. Listed stocks are the ones that have filled for an IPO, and the SEBI has listed them. Unlisted are the ones where they are on the verge of filling an IPO and then, based on the results, then come under listed stocks.
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aishwarya.frm.28
As traders and investors, I reckon we concentrate more on the performances, news, notifications and historical trends of listed stocks as only they are accessible to us.