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What are exchange quotation lists, and why should an investor pay attention to them?

 What are exchange quotation lists, and why should an investor pay attention to them?

Formation of an effective investment portfolio requires taking into account some critical indicators, one of which is checking the listing of a stock or bond in the stock exchange’s quotation lists. This shows the security of the paper and its stability during financial crises. But what are exchange quotation lists?

Quotation lists – what are they?

These are three categories of securities that show which stocks and bonds are admitted to trading; assignment to each of the three levels also indicates the level of reliability of the asset. Over time, the stock may gain another level.
In simple terms, the quotation lists of the exchange are an indicator of the compliance of the securities of any issuer with the established criteria. The process of including an asset in such a list is associated with listing – the issuer submits an application for admission to trading, and his paper must pass the check of the stock exchange.

Quotation Lists and Investments

The benefits of using stock exchange lists are rarely spoken about, but this factor cannot be excluded when assessing the attractiveness of a particular security. The quotation lists of the stock exchange are regularly updated – thanks to them, long-term investors can choose the most reliable bonds to diversify their risks.
But the use of lists also benefits traders who prefer aggressive stock speculation strategies. For them, the exchange has specially prepared the non-quotation part of the list, which includes securities with a high level of risk, but, presumably, with a high yield.Quotation Lists and Investments

Listing levels of securities and their differences

As mentioned above, any stock platform, including the Moscow Exchange, divides quotation lists into three main levels, which show the degree of reliability of a trading instrument:

  • The first level list – this includes securities that have been recognized by the exchange as the most reliable. This includes all bonds of large and stable enterprises that will prevent pension funds and insurance companies from going bankrupt.
  • Second level list – such a quotation list of the exchange includes those shares that do not meet some of the criteria for listing in the first level, but are still reliable.
  • The third level list – contains securities of young issuers or enterprises that, for some reason, refuse to meet the criteria set for the previous levels.

It should be understood that listing a security in a particular quotation list of the Moscow Exchange does not speak of its quality, just as getting into the first level list cannot guarantee one hundred percent reliability.

The advantage of listing for investors

Above, we have already briefly discussed the main advantages of the quotation lists of the Moscow Exchange, which are also relevant on foreign exchanges. In order not to collect information on the issuer on his own, a trader can simply study the available listings, since the exchange has a lot of data to analyze the reliability of a security.
It is important to understand that the listing level is just one of the factors that must be taken into account when building a portfolio – you should not limit yourself to just finding a paper on the list.

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