Understanding All About Unlisted Securities Exchange And More

By Rawat Feb3,2023

The Securities and Exchange Board of India’s continual oversight and rules provide a safety net for listed shares on the stock market (SEBI). Behind the official stock exchanges, there is a sizable stock market that operates continuously. The market for unlisted security exchanges is located all over the world. Over the Counter or OTC, the buy and sell unlisted shares market is where unlisted shares are traded. Unlisted shares provide tremendous potential for exposure and growth, but they also carry the danger of laxer regulation. If chances with such high growth rates catch one’s attention, knowing how to purchase unlisted shares of a company would be helpful.

What Are Unlisted Shares?

Any security or financial instrument that can be traded on over-the-counter markets is referred to as an unlisted share and is also referred to as over-the-counter (OTC) security.

Unlisted businesses typically do not trade on a recognized stock market. This is because smaller or more recent businesses either don’t want to or are unable to meet requirements like listing costs and market capitalization.

Unlisted Financial Instruments: Types

Common stock is the most prevalent category of unlisted financial instruments. The OTC markets are where most of these unlisted equities are traded. Additional instruments are:

  • Dollar stock
  • Business bonds
  • Public sector securities
  • Swaps and other derivative products

Major Aspects

A security or financial instrument that belongs to a business but is not publicly traded on the stock market is called an unlisted share.

Common stocks, penny stocks, corporate bonds, government securities, and derivative products are some examples of unlisted stocks.

By funding start-ups and intermediaries, purchasing ESOPs directly from employees or promoters, or contributing to PMS and AIF plans that purchase unlisted shares, you can invest in the top unlisted companies in India.

Illiquidity, capital loss, a lack of dividends, and dilution risk are some of the dangers.

Is purchasing unlisted shares safe?

Unlisted shares are traded over-the-counter (OTC), where buyers and sellers interact through middlemen yet exchange the instruments directly. Therefore, trading in unlisted shares carries a credit risk because this market is neither organized nor regulated. Unlisted shares are, however, typically exchanged between businesses, sizable brokerage firms, and HNIs or institutional clients. Therefore, the risks are reduced based on the standing of the market participants of unlisted shares. If you can select the ideal intermediary for trading in unlisted shares, the risk also falls.

The primary risk, however, is inherent in the investment decision, which is whether or not the company whose unlisted shares you are purchasing will go public if the price of shares will rise, or whether it will fail due to lack of business. Before investing in any unlisted share, the only choice is to do thorough research on the company’s fundamentals and other variables.


If you choose the right unlisted shares, you might find that hidden gem. Investors may receive returns that are exponential in nature. The fundamentals of the companies and the intermediary you will use to purchase the shares are the two most crucial factors to take into account when choosing an unlisted stock. Since choosing a trustworthy intermediary is crucial when investing in unlisted shares, Tata Capital Wealth has been offering services relating to unlisted shares.

By Rawat

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