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Listed vs Unlisted Stocks
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The share market is in bloom in the past years, the reason being its immense success as a permanent source of income. The one thing that is commonly accessed is the difference between listed vs unlisted stocks.
Different stocks trade officially with various stock exchanges. These are known as listed stocks. Other than these, some stocks are not listed either in BSE or NSE. These stocks are known as unlisted stocks.
The official listing difference is a common one, but apart from this, other trading differences are apparent between the listed and the unlisted stocks.
The unlisted stocks are the ones that are traded independently. This means that they are not officially associated with any of the stock exchanges. For example, OYO, Zomato, Amul India, etc.
Others are listed and officially trade with the stock exchanges. HDFC, Axis bank, etc., are the shares that are formally listed on the stock exchange. Let us now discuss some of the key differences between listed and unlisted shares.
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Investment Process
In the listed stocks, the process of investing is straightforward and convenient. The paperwork required to initiate the process is not much, and thus the whole process runs super smoothly.
Whereas, in the case of unlisted stocks, the process can get very tiring and cumbersome. The paperwork is a lot, and the delivery in unlisted stocks also takes a longer time.
The other significant difference between listed and unlisted stocks is that of ownership. The listed companies usually have their right in the hands of different shareholders.
When it comes to unlisted companies, the ownership is of the private shareholders. They may include the founders and other associated people.
The liquidity of listed and unlisted shares also differs from each other. The listed shares are always very easily and readily available. This is the reason that their liquidity is never a problem.
But when it comes to unlisted shares, it is right to say that these stocks’ sales are not easy. They are not readily available, and the reason that they have less liquidity.
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Investment Risks
The listed shares are officially traded in the stock exchange, therefore the share market risk associated with them are less.
Whereas the unlisted stocks have a higher risk factor as the stocks are traded unofficially, they are usually new-age and start-ups.
The stock prices of the listed shares are readily available, therefore, it is very convenient to determine the market value of these stocks.
When it comes to unlisted stocks, determining of market value becomes quite tricky. Although there are various applications designed for this, there is always an estimate that is calculated.
This is because of the uncertainty and non-availability of the market price.
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Investment Transparency
Everything that happens with the listed shares happens officially. This is the reason why there is high transparency in the finances.
On the other hand, the unlisted shares do not have such transparency in the finances.
Let us sum up all the differences for an easier understanding.
| Listed vs Unlisted Stocks | ||
| Criteria | Listed Shares | Unlisted Shares |
| Definition | The ones that are traded with the official stock exchanges. | These are not listed with the official stock exchanges. |
| Investing Process | Easy and less paperwork. | A little cumbersome and involves a lot of paperwork and even more in the absence of a demat account. |
| Ownership | Owned by a lot of shareholders. | Owned by private investors. |
| Liquidity | Stocks are readily available, making them highly liquid. | Not very liquid because of less availability. |
| Risks | Less risks. | High risks. |
| Valuation | Easy to get market value. | Taking out the market value is a task because of the unavailability of stock price. |
| Transparency | High transparency | Less transparency. |
Conclusion
The listed stocks have always been there in the market, the entry of the unlisted ones is new.
The increasing competition for the listing in the stock exchanges has left even some big companies like Reliance to have some unlisted shares.
When we talk of listed and unlisted stocks, specific differences come to mind. Apart from being associated with the stock exchanges or not, they also differ in other ways.
The risks are less than the unlisted stocks for listed stocks because of the authentic, official procedure, and channel. The unlisted stocks are the best when you are looking for new-age companies and constant innovation.
Be is listed or unlisted share, the valuation is also different in both the cases. It is easier to calculate the market price of the listed shares when compared to the unlisted ones.
The listed stocks have more liquidity than the unlisted ones and also more transparency. There are, therefore, visible differences between listed and unlisted shares.
If you are willing to invest in the listed or the unlisted shares, then it is essential to understand the differences as well!
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