## Comprehensive Analysis of the Three Major Trading Markets: Listed, OTC, and Emerging Markets Investors Must Know

Want to invest in stocks but confused by "listed," "OTC," and "emerging" markets? Don't worry, today we'll clarify these three markets—each ranked by risk and regulation from high to low. Choosing the right market will make your investment efforts more effective.

### Quickly Understand the Differences Among the Three Major Markets

| Market Type | Company Size | Regulation Intensity | Liquidity | Volatility | Suitable Investors |
|--------------|----------------|----------------------|-----------|--------------|---------------------|
| **Listed (TWSE/NYSE/NASDAQ)** | Mature large-cap | Strictest | Best | Smallest | Beginners, Conservative |
| **OTC (TPEx/OTC Market)** | Growth, Mid-cap | Moderate | Moderate to High | Moderate | Mid-level Investors |
| **Emerging (Emerging Market)** | Startups, Early-stage | Loosest | Worst | Extremely high (no price limits) | High-risk Tolerance |

## Listed: The "Safe Zone" of Large Corporations

**What is a listed company?** A company officially traded on a formal exchange. In Taiwan, it's the Taiwan Stock Exchange (TWSE); in the US, it's NYSE or NASDAQ.

Giant companies like TSMC and MediaTek are here. Why? Because listing requirements are the strictest—companies must operate for at least 3 years, have a capital of over NT$600 million, and demonstrate continuous profitability. After listing, they must publish quarterly financial reports, making them highly transparent. Companies that fail to meet standards risk delisting.

**What do investors think of listed stocks?**
- High trading volume, easy to buy and sell, excellent liquidity
- Relatively stable volatility, suitable for long-term holding
- Returns are much higher than bank deposits and bonds (US stocks average about 10% annual return over 30 years vs. 5% for bonds)

Many listed companies also pay dividends, allowing you to earn interest passively.

## OTC: The "Medium-Risk Stage" for Growth Stocks

**What is OTC?** Trading through the OTC Center (TPEx) or listing on the US OTC markets (divided into OTCQX, OTCQB, and Pink Market).

OTC regulation is looser than listing—companies only need 2 years of operation and over NT$50 million in capital to qualify. It’s home to growth companies, thematic stocks, and mid-sized firms, making it a hunting ground for investors seeking high growth.

**Three levels of US OTC markets:**

1. **OTCQX Best Market** — Most Strict
- Includes penny stocks and shell companies
- Requires SEC reporting and disclosure
- Includes pre-IPO companies aiming for NYSE/NASDAQ

2. **OTCQB Venture Market** — Middle Tier
- Focused on early-stage and developing companies
- Allows low-priced stocks but not bankrupt firms
- Must provide annual financials audited by an accountant

3. **Pink Market** — Most Free (and Most Chaotic)
- Almost no requirements, just submit a form to FINRA
- No financial disclosure needed, no SEC registration
- Highest risk, often targeted by "Wolf of Wall Street" movies

**Pros and Cons of OTC Stocks:**
- Advantages: Low share prices (e.g., $1 stocks rising to $1.50 yield 50%), wide selection (many international companies choose OTC for secondary listing)
- Risks: Loose regulation leads to less info disclosure, low trading volume can cause liquidity issues, highly sensitive to macro data, prone to sharp rises and falls

## Emerging Market: The "Funding Springboard" for Startups—Also a No-Go Zone for Beginners

**What is emerging?** A new stock board designed for companies that don’t meet OTC or listing standards but want funding and exposure. Biotech startups, innovative teams, and thematic stocks often debut here.

**Why is emerging the riskiest?**
- No price limits; daily gains or losses of 300% are possible
- Very poor liquidity; difficulty selling when you want
- Minimal transparency; companies disclose as much as they wish
- Uses negotiated trading instead of automatic matching, leading to large price swings and slow transactions

**Realities of buying emerging stocks:**
- Must confirm your broker supports emerging trading and sign risk notices
- Only whole shares (1000 shares per lot) can be traded
- No price limits, meaning unlimited potential losses

## How to Buy Stocks in the Three Markets?

**Listed stocks:**
- Taiwan: Open an account with a securities broker
- US: Open an overseas broker account or use cross-border trading; note trading hours (Taiwan time 21:30–4:00 or 22:30–5:00 depending on daylight saving)

**OTC stocks:**
- Taiwan: Place orders through a securities broker with a trading contract
- US: Most overseas brokers support OTC trading; open an account and trade

**Emerging stocks:**
- Open trading functions at the broker’s counter or online
- Sign risk disclosures and related documents
- Only whole shares can be traded
- Be prepared for slow transactions and large spreads

## Listed vs. OTC: How Should Investors Choose?

**Suitable for:**
- Beginners, low-risk tolerance investors
- Conservative investors aiming for long-term holding and dividends
- Value investors seeking stable, quality stocks

**OTC is for:**
- Investors with some market experience, able to handle moderate volatility
- Active traders hunting for growth and thematic stocks
- Those comfortable with short-term fluctuations and risk awareness

**Emerging is for:**
- Investors with very small capital, capable of bearing extreme losses
- Experts in financial analysis who can judge the authenticity of themes
- Momentum traders, short-term players
- **Absolutely not suitable for beginners**—period.

## Three Steps for New Investors

**1. Assess Your Finances**
- Calculate how much you can invest; don’t risk all your assets
- Consider income, living expenses, debts, savings; keep emergency funds

**2. Do Your Homework Before Investing**
- Read company financial reports and conference calls
- Review industry reports from analysts (much easier than guessing blindly)
- Master basic stock and market knowledge

**3. Set Clear Investment Goals and Avoid Being Driven by Noise**
- Establish monthly and yearly targets
- With goals, you won’t panic over daily news or short-term volatility
- Maintain rationality amid market noise

**Core Advice:** Start with listed stocks to gain experience. Once you understand fundamentals and technicals, gradually explore OTC. Save emerging stocks for when you become a seasoned investor. Investing isn’t about getting rich overnight; it’s a process of knowledge accumulation and patience.