When a stock is delisted from a major exchange, it means that it no longer meets the exchange's listing requirements. This could be due to a number of reasons, such as the stock's price falling below a certain level, the company's financial performance declining.
If a stock is delisted, it may continue to trade over-the-counter (OTC). OTC markets are less regulated than major exchanges, and they tend to have lower trading volume. This means that it can be more difficult to buy and sell delisted stocks, and the prices of these stocks may be more volatile.
However, shareholders who own delisted stocks are still able to sell them. They can do this through a broker who specializes in OTC trading. It's important to note that delisted stocks are considered to be riskier than stocks that are listed on major exchanges, so investors should carefully consider the risks before buying or selling them.
Risks associated with investing in delisted stocks:
Lower liquidity: As mentioned earlier, OTC markets tend to have lower trading volume than major exchanges. This means that it can be more difficult to buy and sell delisted stocks, and the prices of these stocks may be more volatile.
Less transparency: OTC markets are less regulated than major exchanges. This means that there is less information available about the companies that trade on these markets. This can make it difficult for investors to assess the risks of investing in these companies.
Higher risks of fraud: OTC markets are more susceptible to fraud than major exchanges. This is because the lower regulatory standards make it easier for fraudulent companies to list their stocks on these markets.