delisting

Delisting refers to the removal of a security or other asset from an official listing on an exchange or marketplace. In financial markets, delisting typically means that a company’s shares cease to be traded on a primary exchange, although they may continue to trade on an over-the-counter market or move to a different venue. Delisting can be voluntary or involuntary.

Voluntary delisting occurs when a company decides to delist, often to pursue privatization, to restructure, or to reduce compliance costs and reporting requirements. Involuntary delisting is initiated by the exchange or regulator when the issuer fails to meet listing standards or violates governing rules; common triggers include sustained low share price, insufficient public float or shareholders, late or non-existent financial reporting, governance deficiencies, or bankruptcy.

Process: The exchange typically provides notices and a cure period. If the issuer regains compliance, the delisting can be avoided; otherwise the exchange will publish a delisting notice with a scheduled last trading day. After delisting, trading is frequently moved to the over-the-counter market, or in some cases trading halts entirely.

Impact: Delisting generally reduces liquidity and can lower the stock’s valuation. It can affect eligibility for index funds, institutional portfolios, and certain investors. For investors, delisting raises risk and may necessitate selling or seeking OTC markets. For issuers, delisting can be part of strategic moves such as going private, but it may restrict access to public capital.

Other contexts: The term is also used for removing products or content from platforms, or for the removal of a listing from a directory. See also related concepts like stock exchange, over-the-counter trading, and market regulation.