Why Do Organizations List Their Securities?

Why Do Organizations List Their Securities?

In order to trade in stock exchanges, the organization needs to list their securities in stock exchange. Only those companies whose shares are listed in the stock exchange could be bought or sold in the exchange. Listing of securities in stock exchange means the permission given to quoting debentures and shares officially on stock exchange’s trading floor. The organization needs to fulfill certain standards which are fixed by the stock exchange in order to get themselves listed.  However, in trading of cryptocurrencies, anyone can enter to participate in the market as there is no central governing authority. One can easily trade in this market through a trading platform like bitcoin code.

Objectives of listing the securities

The main objectives are:

  • To protect the investor’s and shareholder’s interest
  • To ensure proper control and supervision of security’s dealings
  • To assure the security’s marketing facilities
  • To avoid the concentration of power
  • To ensure the security’s liquidity
  • To require the promoters to possess a reasonable stake in the organization
  • To regulate the security’s dealings

Benefits of listing the securities

Protection of the interest of investors- The securities would be traded according to specified rules and regulations. The organizations that are listed should offer full information about their turnover, liabilities, assets, etc to the stock exchange. The interest of the investors would be protected as the companies disclose full information. The investors could arrive at their own decisions after the thorough analysis of the organization’s financial statements whose shares they wish to buy.

Publicity of securities- Securities which are listed would get wide publicity. For the investor’s benefits, securities rates are quoted regularly. The rates of the securities along with the name of the organization are mentioned and the investors will become familiar with those securities.

Goodwill- The organization’s securities which are listed in the stock exchange has a better goodwill and name among the public. These securities would be rated highly in the stock market and the banks are ready to accept those securities as the collateral securities.

Liquidity is ensured- There is a ready market for the listed securities in the stock exchange.  A huge number of sellers and buyers would be present at the exchanges to conduct the trading of securities. The prices that are offered for the securities are very much competitive.

These above-mentioned reasons are the driving force behind for the organization to list their securities in the exchange.