Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Listed Security

What it is:

A listed security is a stock, bond, derivative, ETF, mutual fund, or other security that trades on a national exchange such as the New York Stock exchange or the Nasdaq.

How it works (Example):

The Nasdaq, which stands for the National Association of Securities Dealers Automated Quotation system, is a computerized system for stock trading that does not have a physical trading floor. It is entirely computerized. The exchange originally operated via telephone, but in 1970 it became computerized. The exchange lists about 5,000 stocks.

The Big Board, also known as the New York Stock Exchange (NYSE) is the first and most popular place for listed securities. It was created in 1792 when two dozen stockbrokers and merchants signed the Buttonwood Agreement. The first company it listed was the Bank of New York.

When a company has listed securities, it usually must make regular public filings with the SEC. These filings detail the company's business operations and financial performance, among other things. The 10-K is just one of many forms a company with listed securities in the U.S. must file with the SEC. SEC regulations S-X and S-K (as well as the instructions to the 10-K form itself) dictate the specific elements, presentation and disclosure requirements of the 10-K.

Stocks, bonds, mutual funds, exchange-traded funds, and derivatives can be listed as securities. The exchanges that list these securities monitor the issuers and are subject to a considerable amount of regulation from several federal agencies, such as the Federal Reserve, and from a host of laws, such as the Securities Exchange Act of 1934. The Securities and Exchange Commission (SEC) is the weightiest of the regulators -- it supervises the NYSE and all national exchanges, brokerage and investment institutions, and other participants in the securities markets. The NYSE must also comply with each state's own securities laws.

When the prices of any listed securities are moving up or down rapidly, the exhanges may restrict trading (primarily to reduce the large number of program trades that occur in an average trading session).

Why it Matters:

For many, listed securities are a symbol of all that is Wall Street. They are often how fortunes are made and lost, and where the free market can be seen in its most tangible form. Listed securities are generally perceived to be more well-established than privately held companies; this is not always the case, however.

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