What Are Listing Requirements?

Listing requirements comprise the various criteria and minimum standards established by stock exchanges, such as the New York Stock Exchange (NYSE), that companies m⭕ust meet to list their shares for trading.

A company will be allowed to list shares for trading only if it meets initial as well as ongoing reꦯquirements.♑

Companies that do not meet listing requirements on major exchanges may be able to offer their shares for trading 澳洲幸运5官方开奖结果体彩网:over the counter (OTC).

Understanding Listing Requirements

Listing requirements are a set of conditions that a firm must meet before listing a security on one of the organized stock exchanges, such as the NYSE, the Nasdaq, the London Stock Exchange, or the Toky💮o Stock Exchange.

The requirements typically include a certain size and💫 market share of the security to be listed. The underlying financial viability of the issuing firm is also a criterion. Exchanges establish these standards as a means of maintaining their own integrity, reputation, and visibility.

When firms request listings, they have to prove ✤to an exchange that they meet ♑the listing requirements. The high visibility and liquidity that a listing supports are strong incentives for a company to meet listing requirements.

Once a security is listed, the issuing firm usually must maintain a set of related but less stringent trading requirements. Otherwise, the company faces 澳洲幸运5官方开奖结果体彩网:delisting. While no legal p🐓enalty is involved, being delisted can mean huge consequences for a company because its stock won’t be traded on the exchange. 

Firms can cross-list a security on more than one꧙ exchange, and often do. Listing requirements are not barriers to trading altogether, as firms are always free to trade securities over the counter. However, OTC trading does not provide anywhere near the liquidity, regulatory oversight, pr⛎estige, or visibility as trading on one of the major stock exchanges provides.

Listing Requirements in Practice

Basic Requirements

Listing requirements vary by exchange, but there are certain metrics that are almost always included. The two most important categories of requirements deal with the size of the firm (as defined by annual income or market capitalization) and the 澳洲幸运5官方开奖结果体彩网:liquidity of the shares (a certai𒊎n number of shares must already have been issued).

For example, the NYSE requires firms to already have 1.1 million publicly traded shares outstanding with a collective market value of at least $40 million ($100 million for worldwide trading).

The Nasdaq requires firms to already have 1.25 million publicly traded shares with a collective market value of $45 million. Both the NYSE and the Nasdaq require a minimum security listing price of $4 per share.

Fees

Usually, an initial listing fee as well as yearly listin💟g fees are required. The annual fees can scale up depending on the number of shares being traded and can total hundreds of thousands of dollars. Nasdaq fees are considerably lower than those of the NYSE. This lower cost has made the Nasdaq a more popular choice of exchange for🧸 newer or smaller firms.