Glossary term
Listing Rules
Subject: Compliance and Regulation, Market Conduct and Securities
Also known as: Listing Obligations and Disclosure Requirements, Listing requirements
Listing rules are the conditions a stock exchange or securities regulator sets for companies whose securities trade on its market, covering admission standards, disclosure, governance and continuing obligations.
Explanation
To get shares or bonds onto an exchange, a company must first meet entry conditions, such as minimum size, track record, a published prospectus and a free float of shares in public hands. After listing it must keep following the rules: announcing price-sensitive news, publishing results on a set timetable, getting shareholder approval for large or related-party deals, and meeting board and committee requirements. Depending on the country, the rules are written by the exchange, by the securities regulator or by both. The name varies; in India the equivalent regulations are called the Listing Obligations and Disclosure Requirements. Breaches can lead to fines, public censure, trading suspension or, in serious cases, delisting. Investors lean on these rules for steady, timely news about the companies they own, and an exchange can suspend trading in a company that ignores them.
Example
A listed retailer plans to buy a business owned by its chairman's family. Under its exchange rules, the deal counts as a related-party transaction. The compliance team prepares a circular, independent directors review the price, and shareholders vote with the family abstaining. Skipping these steps would put the retailer in breach.
Not to be confused with
- Securities law
- Securities law is a statute passed by the legislature. Listing rules are conditions of access to a particular market, often set by the exchange itself.