When we say a stock is “listed” we mean that it is listed or included among those issues traded on a stock exchange. While almost everyone is familiar with the New York Stock Exchange, the most famous securities market in the world, and with the American Stock Exchange (formerly the New York Curb Exchange), few people know that there are sixteen other stock exchanges in the United States. These are usually called regional exchanges as in most instances they specialize in trading in the securities of corporations native to that section of the country.

The reason for listing a stock or bond on an exchange is to provide it with a market where people who wish to buy or sell can, through the agency of floor brokers, arrive at a mutually satisfactory price by auction. Each exchange has its own particular listing requirements, not usually as comprehensive and formidable, however, as those of the New York Stock Exchange.

Requirements for listing with the New York Stock Exchange include the following: the company must have $8 million or more in net tangible assets, more than 400,000 shares outstanding and not closely held, and 1,500 or more stockholders (owning 100 snares or more). Further, the company must have reported net earnings (after taxes) for a previous year of not less than $1 million. After listing, the company must periodically supply earnings statements, balance sheets, and other financial data.

For the company, advantages of listing include the following: company prestige, daily or frequent trading in its stock with publicly reported prices, superior loan or collateral value of its securities because its stock becomes well known to investors, new public financing is done more easily and at lower cost, listing makes its shares more acceptable to large individual and institutional investors, and broad active markets attract new stockholders.

All securities not listed on any exchange trade over-the-counter. This over-the-counter market is actually by far the largest in the world. The largest outstanding marketable securities in America are the obligations of the U. S. Government. While a number of these are listed on the New York Stock Exchange, actually over 95% of all government bonds traded are traded over-the-counter.

It is not at all uncommon for a broker in New York to buy from another in Dallas, Chicago, or Los Angeles. There is a national network of dealers several thousand of them. They have no set hours of trading and quite generally start trading before exchanges open and often continue after they have closed.

All over-the-counter trades are handled by direct negotiation between dealers. The dealer may act as a principal buying the security for his own account. In that case, if he resells it to a customer, he will do so at a net price including the addition of a profit for his effort. In such an instance, he becomes in effect a merchant of securities. Dealers also frequently execute over-the-counter orders as brokers, buying at the best obtainable price and charging the customer a standard commission, much as an exchange broker would do.

Actually there are brokers who trade exclusively over-the-counter, and there are hundreds of stock exchange member firms which have a special department for handling over-the-counter business. In any event, it is most important that you deal with a reputable broker in over-the-counter transactions. Before you order, get the bid and asked quotations so that you may know the range within which your order should be filled.

Listed over the counter, marketability is a critical factor in making good investment decisions. Be informed to be successful!

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