## Understanding Taiwan's Three Major Listing Types: How to Choose Between Listing, OTC, and Emerging Stocks?

Before investing in Taiwan stocks, you must understand a fundamental question—since all are traded on the securities market, why are there three categories: Listing, OTC, and Emerging stocks? What exactly are the differences among these three types? Choosing the wrong investment target could lead to painful consequences.

### Quick Judgment: Overview of the Three Major Markets

First, a straightforward distinction: **Listing is the formal market, OTC is the emerging force, and Emerging stocks are startup teams**.

Listed stocks are managed by the Taiwan Stock Exchange (TWSE), representing companies that have passed the strictest review. OTC stocks are traded on the Taipei Exchange (TPEx), with looser review standards and greater growth potential. Emerging stocks are companies that haven't yet met the listing criteria, serving as a transitional stage for early testing.

The core differences among the three are reflected in four dimensions: regulatory strictness from strict to lenient, risk level from low to high, trading liquidity from good to poor, and volatility from small to large.

### Listed Stocks: The First Choice for Conservative Investors

**What is a listed stock?**

In Taiwan, listing means a company has completed the listing process on the TWSE and becomes a public company. In the US stock market, NYSE and NASDAQ dominate.

Listing requires passing the most rigorous review; companies must be large-scale, operationally mature, and have high transparency in financial reports. Leading companies like TSMC and MediaTek are typical listed companies.

**Why invest in listed stocks?**

Sufficient trading volume means you can sell at any time, ensuring good liquidity. Stock prices tend to fluctuate relatively steadily, and risks are effectively controlled. This is why beginners and conservative investors prefer listed stocks—they offer greater safety.

Additionally, listed companies are required to disclose financial data regularly, allowing investors to clearly understand operational status. Companies that do not meet exchange requirements risk delisting, which acts as a natural淘汰mechanism.

### OTC Stocks: The Arena for Mid-Level Investors Pursuing Growth

**The fundamental difference between OTC and listing**

OTC stocks are traded on the Taipei Exchange (TPEx), using different matching methods. Listing involves centralized auction, while OTC trading is conducted through broker-dealer inventories.

The OTC market not only trades stocks but also includes bonds, foreign exchange, cryptocurrencies, and derivatives, reflecting its diversity and flexibility.

**What are the features of OTC stocks?**

The threshold for entry is more lenient, making it easier for growth stocks and thematic stocks to obtain financing. Volatility is much higher than listed stocks, but opportunities are also richer—stocks that rise 30% are more common OTC than on the main market.

Trading volume and liquidity are between those of listed and Emerging stocks, avoiding the complete inability to sell but still less convenient than listed stocks. Suitable for investors with market experience who can tolerate moderate risks.

**Levels of the US OTC Market**

The US OTC market is divided into three tiers. The best market (OTCQX) is the most regulated OTC market, hosting many foreign companies already listed or preparing to list on NYSE or NASDAQ. The risk market (OTCQB) is the middle tier, mainly early-stage and developing companies, requiring annual financial reports. The Pink Market (PINK) has the lowest thresholds, with almost no requirements—just submitting an electronic form to the SEC—leading to the highest risk level—some scam stocks from "Wolf of Wall Street" come from Pink.

### Emerging Stocks: A High-Risk, High-Return Startup Stage

**What are Emerging stocks?**

Emerging Stock Board is a temporary stage for companies before they reach OTC status. Startups, biotech and medical device companies, SMEs, and promising new teams test waters here.

**Why be cautious with Emerging stocks?**

Emerging stocks have no price fluctuation limits, meaning a stock could plummet 50% in a single day. Trading volume is extremely low, often with unfilled orders. Financial reports and information transparency are far inferior to listed and OTC stocks, making it difficult for investors to grasp the true status of the company.

Because of this, Emerging stocks are not suitable for beginners. Only investors with high risk tolerance, strong stock analysis skills, and the ability to judge financial authenticity should participate. Even then, investment in Emerging stocks should be limited to a small portion of total assets.

### How to sell Emerging stocks? Are there special trading requirements?

**Thresholds for buying and selling Emerging stocks**

To trade Emerging stocks, you must first confirm with your broker whether you are qualified for Emerging stock trading. When activating this feature, due to its high-risk nature, you will need to sign risk warning documents and other additional paperwork.

**Restrictions on trading methods**

Emerging stocks use "negotiated trading" rather than automatic matching, meaning orders won't execute immediately but require buyer and seller to agree on a price. This results in slower transactions and larger price swings. Only "spot" trading is allowed; margin trading, short selling, or day trading are not permitted. Transactions must be in whole lots (1,000 shares).

There are no price fluctuation limits; theoretically, a stock can fluctuate arbitrarily, which is a huge psychological test for investors. Low liquidity means sometimes you can't sell when you want, increasing the risk of being trapped.

**Who should operate Emerging stocks?**

Suitable for high-risk tolerant investors, those skilled in individual stock research, capable of judging financial and thematic authenticity, with small capital proportions and the ability to endure extreme volatility. Momentum traders and short-term investors are also appropriate. Not suitable for beginners or those investing most of their funds here.

### How to buy listed and OTC stocks?

**How to buy listed Taiwan stocks**

Open a securities account with a Taiwan broker to trade. For US stocks, you need an overseas broker account or through a custodian, but be aware of trading hours. US regular trading hours are from 9:30 to 16:00 Eastern Time, Monday to Friday. Due to time difference, Taiwanese investors need to trade at night. During daylight saving time (March–November), it's 21:30–4:00 Taiwan time; during standard time (November–March), it's 22:30–5:00.

Also, watch out for US market holidays when markets are closed. Listed stocks are suitable for beginners, conservative investors, value stock enthusiasts, and long-term investors.

**How to buy OTC stocks**

Place orders through a securities broker, signing an account opening agreement. Most overseas brokers support OTC US stocks, so you can open an account and trade. OTC stocks are suitable for investors with basic market knowledge, moderate risk tolerance, or those seeking growth and thematic stocks, and who can accept short-term fluctuations.

### Self-Assessment Before Investing: Are You Ready?

**Evaluate your financial situation**

Before investing, clearly determine how much capital you can allocate. Calculate income, living expenses, debts, and savings to accurately assess investable funds. Investing can help grow wealth but is not a get-rich-quick tool. Never invest all your assets in the stock market in a gamble.

**Master necessary knowledge and analysis skills**

Reading financial reports and earnings conference calls is essential. Beginners can refer to industry reports from investment institutions, which are processed by analysts and easier to understand. Acquiring relevant stock investment knowledge is crucial for making accurate judgments.

**Set clear investment goals**

Investing without goals is easily disrupted by daily news and short-term fluctuations. Set monthly and yearly financial targets to steadily advance your investment plan. With clear goals, you won't be distracted by market noise.

Investing in listed stocks is the safest way to start. After gaining experience, consider OTC stocks; Emerging stocks should be approached cautiously. Understanding the fundamental differences among the three helps you make correct choices based on your risk tolerance and experience.