A:

The criteria to remain listed on an exchange differs from one exchange to another. On the New York Stock Exchange (NYSE), for instance, if a security's price closed below $1.00 for 30 consecutive trading days then the exchange would initiate the delisting process. Also, exchanges charge annual listing fees that companies must pay in order to stay listed.

In addition to the price and fee criteria, the major exchanges also monitor market capitalization, shareholders' equity and revenue, but the price criteria is most common. When a security is found to be not in compliance the exchange issues the company a notification of non-compliance, but the stock is not immediately taken off the stock exchange. This letter gives the company the opportunity to respond with a description of the actions they are taking, or plan to take, to become compliant with continued listing standards. If the company doesn't respond with their plan of action within 10 business days of the receipt of the letter, the exchange would proceed with the delisting. If the exchange accepts the plan, the company's financial progress will be monitored by the exchange according to the milestones outlined in the plan.

In addition, you can identify which companies are non-compliant by looking at a list published by exchanges on non-compliant securities or you can identify them directly if their stock symbol has the indicator "BC" attached to the end of it. Note that even though these companies are non-compliant they are still allowed to trade normally on the exchange. Most major exchanges have similar delisting rules and compliance process.

For more in-depth information on delisting, refer to The Dirt On Delisting.

This question was answered by Joseph Nguyen.

RELATED FAQS
  1. I own shares of a company that just received a delisting notice from Nasdaq. Does ...

    Let's start by walking through the reasons for listing requirements and what happens when a company's stock is delisted from ... Read Answer >>
  2. If a stock is delisted, do shareholders still own the stock?

    If a company has been delisted, it is no longer trading on a major exchange, but the owners of the company shares are not ... Read Answer >>
  3. How does a company switch from one stock exchange to another?

    A publicly traded company can, in fact, switch to a stock exchange that it believes will be favorable to its financing efforts. ... Read Answer >>
  4. Can stocks be traded on more than one exchange, such as, for example, on both the ...

    A stock can trade on any exchange on which it is listed. And to be listed it must meet all of the exchange's listing requirements ... Read Answer >>
  5. What are the listing requirements for the Nasdaq?

    Major stock exchanges, like the Nasdaq, are exclusive clubs - their reputations rest on the companies they trade. As such, ... Read Answer >>
  6. Does all common stock trade on exchanges?

    Find out about types of common stock that trade on stock exchanges and types that trade in varied over-the-counter (OTC) ... Read Answer >>
Related Articles
  1. Investing

    The Dirt On Delisted Stocks

    Listed securities are "the cream of the crop". Find out how a firm can lose that status and why you should be wary.
  2. Investing

    Digging For Profitable Delistings

    Deregistration can provide opportunities for savvy investors. We'll show you how to cash in.
  3. Investing

    Why Companies Delisted from Indexes Can Be a Buy (OI)

    Learn about a value-investing strategy that takes advantage of stocks that may represent a bargain when they're delisted from a benchmark index.
  4. Insights

    What's an Exchange?

    An exchange is an organized marketplace where securities and other financial instruments are traded.
  5. Insights

    Getting To Know The Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask!
  6. Investing

    Stock Exchanges: A Global Tour

    Check out the history and inner workings of the world's six most well-known stock exchanges.
  7. Insights

    The NYSE and Nasdaq: How They Work

    Learn some of the important differences in the way these exchanges operate and the securities that trade on them.
  8. Insights

    The Birth Of Stock Exchanges

    Learn how British coffeehouses helped give rise to the juggernaut that is the NYSE.
  9. Investing

    Translating Ticker Talk

    Stock tickers can say a lot about a company in just a few letters. Find out how to read them.
RELATED TERMS
  1. Delisting

    The removal of a listed security from the exchange on which it ...
  2. Listed Security

    A financial instrument that is traded through an exchange, such ...
  3. Primary Listing

    The main stock exchange where a publicly traded company's stock ...
  4. Listed

    Being included and traded on a given exchange. Most exchanges ...
  5. Relisted

    The return to listed status for a stock after having been delisted ...
  6. Regional Stock Exchange

    A place outside of a country's primary financial center where ...
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center