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Delisted Stocks

If a company cannot meet minimum standards set by the exchange or market that it is listed under, its stock may be ejected from that market. This is known as delisting. Stocks that have been delisted from one market may continue their activity in a secondary market. Stocks maybe delisted from an exchange due to not meeting a minimum volume, a minimum price, or other requirements. For example, stocks listed under NASDAQ National Market that continue to trade below $5 per shares for a period of time may be delisted. They usually migrate to the OTC market and are quoted on the OTC Bulletin Board system. Obviously being delisted is a negative point for a stock, causing many investors to lose confidence and to drive the price down even lower.

Over The Counter (OTC) Stocks

All stock exchanges have listing requirements for the stocks that are traded in them. For example, stocks may be required to maintain a certain minimum number of shares, share price, market cap, etc. in order to keep their listing status.When a stock can no longer maintain its listing requirement (such as maintaining a $5 per share price), it is normally delisted and moves into another trading system known as the over the counter or OTC market as an unlisted stock. OTC stocks are not traded in an exchange but are moved through a network of dealers and brokers (market makers) who negotiate directly with one another. The OTC market is regulated and overseen by the NASD (parent of NASDAQ). In order to facilitate trading, the OTC market makes use of an electronic quotation system known as the OTC Bulletin Board (OTCBB) on which the bid and ask prices for the OTC securities are continuously posted by the market makers. Therefore OTC stocks are sometimes referred to as Bulletin Board stocks. There are no listing …