Listing requirements
Listing requirements are the set of
conditions imposed by a given stock exchange
upon companies that want to be listed on that
exchange. Such conditions sometimes include
minimum number of shares outstanding, minimum
market capitalization, and minimum annual
income.
Requirements by stock
exchange
Companies have to meet the requirements of
the exchange in order to have their stocks and
shares listed and traded there, but requirements
vary by stock exchange:
-
London Stock Exchange: The main
market of the
London Stock Exchange has requirements
for a minimum market capitalization
(£700,000), three years of audited financial
statements, minimum public float (25 per
cent) and sufficient working capital for at
least 12 months from the date of listing.
-
New York Stock Exchange: To be
listed on the
New York Stock Exchange (NYSE), for
example, a company must have issued at least
a million shares of stock worth $100 million
and must have earned more than $10 million
over the last three years
Ownership
Stock exchanges originated as
mutual organizations, owned by its member
stock brokers. There has been a recent trend for
stock exchanges to demutualize, where the
members sell their shares in an
initial public offering. In this way the
mutual organization becomes a corporation, with
shares that are listed on a stock exchange.
Examples are
Australian Stock Exchange (1998),
Euronext (merged with New York Stock
Exchange),
NASDAQ (2002) and the
New York Stock Exchange (2005).
Other types of
exchanges
In the 19th century, exchanges were opened to
trade
forward contracts on
commodities. Exchange traded forward
contracts are called
futures contracts. These commodity
exchanges later started offering future
contracts on other products, such as interest
rates and shares, as well as
options contracts. They are now generally
known as
futures exchanges.
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