A listed stock is a security that is traded on a formal stock exchange such as the New York Stock Exchange (NYSE) or NASDAQ. These exchanges provide a regulated environment where stocks are bought and sold, ensuring transparency, liquidity, and a high level of investor protection. To be listed, companies must meet stringent requirements regarding financial health, governance, and reporting. This often includes minimum thresholds for market capitalization, share price, and the number of publicly traded shares. Once listed, companies are subject to continuous disclosure obligations, including regular financial reports and material event announcements.

In contrast, an over-the-counter (OTC) stock is traded through a decentralized network of dealers and brokers rather than on a centralized exchange. OTC trading is less formal and typically involves smaller, less established companies that do not meet the listing requirements of major exchanges. These can include startups, companies in financial distress, or those seeking to avoid the costs and regulations associated with exchange listings. The OTC market is often seen as riskier due to lower liquidity, less transparency, and fewer regulatory safeguards. Prices can be more volatile, and information on these companies may be harder to obtain, making thorough due diligence essential for investors.

The primary differences between listed and OTC stocks lie in their trading venues, regulatory oversight, transparency, and associated risks.