Listing Requirements

Listing Requirements

What are the registration requirements

Listing requirements include the various standards established by stock exchanges, such as the New York Stock Exchange, for controlling stock market membership.

DISTRIBUTE the listing requirements

Listing requirements are a set of conditions that a company must meet before listing a stock on one of the organized exchanges, such as the New York Stock Exchange (NYSE), the Nasdaq, the London Stock Exchange or the Stock Exchange of Tokyo. Requirements generally measure the size and market share of the security to be listed, as well as the underlying financial viability of the issuing company. Exchanges establish these standards as a way to maintain their own reputation and visibility.

When applying to be listed, a company will have to prove to a stock exchange that it meets the listing requirements. Since major exchanges offer high visibility and liquidity for a security, trading companies are strongly encouraged to meet the listing requirements. Once a security is listed, the issuing company must generally maintain a set of related but less stringent trading requirements – otherwise, the security must be delisted. There are no legal sanctions for striking off; it simply results in the expulsion of the specific exchange.

Companies can, and often do, cross-reference a stock on multiple exchanges. Listing requirements are not barriers to trading, as companies are always free to trade OTC securities; however, these do not offer nearly the prestige or visibility of being listed on any of the major exchanges.

List of requirements in practice

Registration requirements vary by exchange, but some measures are almost always included. The two most important categories of requirements concern the size of the company (defined by annual income or market capitalization) and the liquidity of the shares (a certain number of shares must already have been issued).

For example, the NYSE requires companies to already have 1.1 million publicly traded stocks with a collective market value of at least $ 100 million; the Nasdaq requires companies to already hold 1.25 million publicly traded shares with a collective market value of $ 45 million. The NYSE and Nasdaq both require a minimum listing price of securities of $ 4 per share.

There is usually a registration fee as well as an annual registration fee, which increases with the number of shares traded and can total hundreds of thousands of dollars. Nasdaq’s fees are considerably lower than NYSE’s, which has historically made Nasdaq a more popular choice for new and smaller businesses.

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