When a United States (US) company''s stock is removed from a major exchange such as the NYSE or Nasdaq, it is known as "delisted". This can happen either voluntarily (the company chooses to exit) or involuntarily (failing to meet exchange requirements such as minimum share price, market capitalisation, or financial reporting compliance). Many investors are concerned about the fate of their holdings after delisting, particularly how to sell those shares.
What Happens After a US Stock Is Delisted
- A delisted stock is no longer traded on the major exchanges (NYSE/Nasdaq).
- You are still a legitimate shareholder and the number of shares in your account remains unchanged.
- The stock will typically move to the Over-the-Counter (OTC) market, such as OTC Markets Group, OTC Bulletin Board (OTCBB), or OTC Pink.
Can You Sell a Delisted Stock?
- Yes, you can still sell a delisted stock if it is traded on the OTC market.
- However, the OTC market differs from the major exchanges:
- Lower liquidity: It is harder to find buyers, and prices can be highly volatile.
- Less transparency: Company information is more limited, and the risk of fraud is higher.
- Wider price spreads: The difference between the buy and sell price can be significant.
How to Sell a Delisted Stock on the OTC Market
- For Malaysian investors using brokers such as M+ (Mplus), you need to contact the Mplus Central Dealer during regular trading hours (US market trading hours) to request assistance in selling OTC stocks. The contact number is +60322012012.
- The selling process cannot be done directly through online platforms like regular stock trading. You need to make a manual request (call or email) to the dealer to help execute the transaction on the OTC market.
- The selling price will follow the current OTC market price, and there is a possibility that you may only be able to sell at a price lower than the original purchase price.
Risks and Challenges of Selling Stocks on the OTC Market
- Difficult to find buyers: Not all OTC stocks are actively traded.
- Unstable prices: Significant price fluctuations can occur.
- Limited information: Companies are less monitored, with fewer financial reports available.
- Transaction costs may be higher: Depending on the broker and OTC fees.
You may also read the article on Business and Investment Risks and Challenges if you are interested.
Practical Steps If Your Stock Is Delisted
- Check the stock status: Verify whether your stock is still traded on the OTC market (you can check the OTC ticker on websites such as Yahoo Finance).
- Contact your broker (e.g. Mplus Central Dealer): Inform them of your intention to sell the OTC stock and obtain guidance on the next steps.
- Ask about fees and procedures: Ensure you understand the costs and time required for the transaction.
- Monitor OTC prices: Use financial websites to monitor the current price before making a selling decision.
Conclusion
US stocks that have been delisted from the major exchanges can still be sold if they are traded on the OTC market. However, the selling process requires you to contact the Mplus Central Dealer during regular trading hours to help execute the transaction. Bear in mind that lower liquidity and higher risks are inherent in the OTC market compared to major exchanges.
Frequently Asked Questions (FAQ)
What happens to my shares if the stock is delisted from a major US exchange?
Your shares still exist in your account but can no longer be traded on the major exchanges such as the NYSE or Nasdaq. Most delisted stocks will move to the OTC (Over-The-Counter) market where they can still be sold, albeit with lower liquidity.
How do I sell a delisted US stock through Mplus?
You need to contact the Mplus Central Dealer during trading hours to request assistance in selling OTC stocks. This process differs from regular selling as it requires manual handling by the dealer. Be sure to ask about the fees and procedures involved.
Will I lose all my money if my US stock is delisted?
Not necessarily. If the stock is still traded on the OTC market, you still have the opportunity to sell it, although the price may be lower. However, if the company goes completely bankrupt, there is a possibility that the shares become worthless.
What is the difference between voluntary and involuntary delisting?
Voluntary delisting occurs when a company chooses to leave the exchange for strategic reasons such as a merger or privatisation. Involuntary delisting occurs when a company fails to meet listing requirements such as minimum share price or financial reporting obligations.
Understanding the risks of delisting is important for every US stock investor. With the right knowledge, you can make wiser decisions and protect your investment portfolio.
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