Read/Post Comments Share on Facebook
This video is sponsored by:

New York Stock Exchange (NYSE) May Have to Delist Stocks

by S. Wade Hansen

The global financial crisis has taken its toll on stock prices---especially on bank stocks like Citigroup (NYSE: C), Bank of America (NYSE: BAC) and Barclays PLC (ADR) (NYSE: BCS)---that are listed on the New York Stock Exchange (NYSE).

The problem is, if certain stock prices drop too low, the NYSE may start delisting them.

What is Delisting?

Delisting is the process of taking a stock off of the exchange where it is currently listed.

You see, stock exchanges---like the NYSE, the NASDAQ and the American Stock Exchange---give stock traders a place to come and buy and sell stocks and get price quote information by listing stocks on their exchange. If a stock is not listed, there is no public forum where stock traders

Review of Today’s Market Action
Essential Reading for Traders Here is a selection of articles every successful investor should read and understand: • What you should know before    investing • Understanding the Dow Jones    Industrial Average • Causes of the Credit Crisis • Understanding LIBOR • Relationship of trends in    stocks, bonds and rates • What Drives Mortgage Rates? • Bond Basics • Understanding a Recession • Understanding the LIBOR/OIS    Spread • Smart Dividend Investing

can go to get information about and execute trades on the stock.

Of course, just because a stock gets delisted by one exchange doesn't mean that it cannot be listed on another stock exchange, but being delisted puts a negative stigma on the stock itself.

Why Would the NYSE Delist a Stock?

The NYSE and other stock exchanges have minimum requirements a stock must meet to maintain its listing on the exchange. If a stock does not meet those minimum requirements, it will be delisted.

For instance, the NYSE has a rule that the 30-day average price of a stock must remain above $1. Unfortunately, one of the members of the Dow Jones Industrial Average, American International Group (NYSE: AIG), is currently listed on the NYSE, but it is trading for less than $1 per share and is at risk of being delisted. [Click here to learn more about What the Dow Jones Industrial Average is.]

Ultimately, stock exchanges delist stocks for the following two reasons:

- They want to maintain their premier image, which helps them attract premier stocks, by disassociating themselves from less-than-premier stocks

- They earn money whenever a stock trades that is listed on the exchange, and premier stocks tend to have more volume than less-than-premier stocks do

More...

Be a Fan on Facebook

Follow us on Twitter

Stocks Articles RSS