Updated on March 16, 2023
A security or financial instrument which is not traded, because it is not listed on stock exchanges is called an ‘Unlisted’ security or instrument. Unlisted securities are generally available through brokers, dealers or can be bought over the counter (OTC). Thus, Unlisted companies are those which do not comply with listing requirements or do not want to list. Unlisted securities might not provide much liquidity and transparency. However, there is lesser volatility in their prices.
Is it safe to buy Unlisted shares?
Unlisted shares are not easily available for all unlisted companies. The buyers and sellers in case of Unlisted securities can trade through brokers/dealers. These do not come under the purview of a regulator and thus caution needs to be exercised. Customers should evaluate the demand of unlisted shares of a company, its future prospects and chances of its getting listed in future, before taking any decision.