Unlisted Trading Privileges (UTP)
What Are Unlisted Trading Privileges (UTP)?
Unlisted trading privileges (UTP) allude to the processes around the trading of a security that isn't required to meet certain base requirements to be traded on a exchange. Regulation for UTP is point by point in the Unlisted Trading Privileges Act of 1994.
Understanding Unlisted Trading Privileges (UTP)
UTP were developed to assist with expanding the liquidity of securities across markets that do exclude registered exchanges. UTP empower certain companies to trade on an exchange without meeting the extra requirements required for every national securities exchange in which they decide to list their security. The most common occasion of unlisted trading happens with over-the-counter (OTC) shares, otherwise called pink sheets, which might incorporate penny stocks.
By and large, UTP were allowed by the Securities and Exchange Commission (SEC) through an application interaction. In any case, Congress in 1994 enacted the Unlisted Trading Privileges Act, which changed the procedures for UTP. The new provisions required the company offering a security issuance, and the exchange where the security is traded, to work jointly in acquiring authorization for UTP from the SEC.
Unlisted Trading Privileges Act of 1994
The Unlisted Trading Privileges Act amended the Securities Exchange Act of 1934, which fills in as a primary governing legislation for the requirements for secondary market trading of securities in the United States.
The Unlisted Trading Privileges Act provisions are itemized in U.S. Code Title 15, Section 78(l)(f). This law permits any securities exchange to stretch out UTP to any company that meets the predefined provisions nitty gritty in the Act. The company must be completely consistent with the provisions going before part (f) of the 1934 Securities Act, which examines the standards required for national securities exchange listing.
The Unlisted Trading Privileges Act of 1994 was developed on principles that try to develop fair and efficient market trading as well as protections for all parties included. Therefore, all choices encompassing UTP look to consider and keep up with certain principles.
Key provisions of the UTP Act include:
- An exchange can offer UTP to a security that is listed on another national securities exchange in compliance with that exchange's requirements.
- The extension of UTP must be approved by the SEC, which can coordinate certain extra requirements.
- The SEC has the privilege to disavow and reestablish UTP on an exchange.
Features
- Unlisted trading privileges (UTP) allude to the rules with respect to trading securities that don't meet the requirements for listing on an exchange.
- Unlisted shares incorporate over-the-counter shares, for example, penny stocks or those of secretly held companies.
- With UTP, a company's stock can be traded on an exchange even however the company hasn't met the extra requirements of that particular exchange.
- In the U.S., regulation for unlisted trading is illuminated in the Unlisted Trading Privileges Act of 1994, an amendment to the Securities Exchange Act of 1934.
