How to buy Unlisted Stocks
Unlisted Stocks are the financial instrument that is not traded on a formal exchange because it does not meet the listing requirements that is needed in the exchange. This is because the smaller or Newley firm cannot comply with certain requirements such as listing fees, market capitalization, etc.
Unlisted securities can be traded in over the counter (OTC) market and they are often called OTC securities. On the other hand, listed shares on the stock market come with a safety net through constant monitoring and regulations by the SEBI.
Types of Unlisted Shares
The Unlisted stocks are mostly the common stocks, here we have mention different types of unlisted shares.
• Penny stocks
• Corporate bonds
• Government securities
• Derivative products like swaps, etc.
Characteristics of Unlisted Shares
Following are the characteristics of the unlisted shares.
1. Dematerialized- The unlisted shares can be purchased through a depository participant account, in which they are available at face value and are transferred to your demat account.
2. Price Mechanism- The movement of the unlisted shares are purely depended upon the supply and demand chain. As no exchange is involved in the unlisted shares, fair price discovery is constantly scrutinised. Unlisted shares is determined by mutual agreement between the dealer and the customer.
3. Growth Factor- Investors can purchase that companies shares which are either technologically or operationally novel. Cost is lower than the advertised space.
4. Liquidity Concerns- Liquidity is very common in the unlisted shares.
Advantages of Unlisted Shares
There are number of benefits provided by the unlisted stocks.
• Unparallel Profits- Due to the illiquidity, the price either stays undervalued or overpriced for an extended period of time. It is good to invest when the market is undervalued.
• No Immediate Concern- Unlisted shares gives you the diversify portfolio because they are either non-volatile or only modestly volatile. So, if you have any extremely volatile stocks in your portfolio then you can add unlisted stocks in your portfolio.
• Investment in the closed market- These stocks are traded over the counter; it will contribute to the development of trust for future investments.
• You can Negotiate- There are enough numbers of buyers and sellers, so if you believe a stock will be worth a particular amount and wish to purchase or sell it at that amount, you have right to bargain directly with the middleman.
Can I buy unlisted shares using Zerodha demat account?
Zerodha allows you to hold securities in an electronic form. The securities held by you need not be listed on SEBI.
If you do not have any demat account in Zerodha and you want to open your account then you can open your account by visiting the below link.
Also Read: How to Place Basket Order in Zerodha