I recently found that many people are not very clear about the difference between listed and OTC stocks in Taiwan, and they also only have a vague understanding of emerging market stocks. So I decided to put together a complete guide to help everyone get started quickly.

Let’s first talk about the most core difference. Listed companies are listed on the Taiwan Stock Exchange (TWSE). They are usually large in scale and more mature in operations—companies like TSMC and MediaTek are examples. The stocks of these companies have good liquidity, high trading volume, and relatively stable price volatility, making them suitable for beginners or conservative investors.

OTC stocks are different. They are traded through the Taipei Exchange (TPEx), using a broker-dealer inventory model. The entry threshold for OTC companies in Taiwan is much more relaxed than for listed companies. They often have strong growth potential and a wider range of themes, but they also experience greater volatility. This market also trades various financial products such as bonds, foreign exchange, and cryptocurrencies, making it suitable for investors who can bear risk and are looking for growth stocks.

As for emerging market stocks, they are basically a transitional category for companies that have not yet met OTC requirements. Startups, biotech companies, and medical device companies are often found here. The biggest feature is that there are no price fluctuation limits, so volatility can be extremely intense. Liquidity is the worst, and information transparency is far lower than for listed and OTC stocks. Risk is highest, and I do not recommend beginners getting involved.

When it comes to trading venues, listed stocks are traded on the stock exchange. For U.S. stocks, the New York Stock Exchange (NYSE) and Nasdaq (NASDAQ) are the main venues. OTC stocks in Taiwan are traded through the Taipei Exchange, while in the U.S. there are three tiers: OTCQX, OTCQB, and the Pink Market. OTCQX has the strictest regulation and the highest requirements; OTCQB is the intermediate tier, focusing on early-stage and developing companies; and the Pink Market has no requirements at all, with the highest risk.

As for listing requirements, those for listed stocks are the strictest. To list in Taiwan, a company must have been established for at least 3 years, have paid-in capital of at least 600 million, meet profitability standards, and also satisfy requirements for the number of shareholders. For U.S. listings, it depends on whether it’s the NYSE or Nasdaq; the NYSE has higher requirements, while Nasdaq is divided into three sub-markets with relatively more flexible standards.

The requirements for OTC are much looser. In Taiwan, to get listed on the OTC market, a company only needs to have been established for at least 2 years, have paid-in capital of at least 50 million, and meet lower profitability requirements. For OTC listings in the U.S., it’s even simpler: the best market and the risk market only require submitting documents and ensuring the stock price is not below $0.01; even the Pink Market only requires a form.

In terms of trading methods, listed stocks can be traded directly through a brokerage account. For U.S. stocks, pay attention to time zone differences. OTC stocks are also placed via broker orders, but you need to confirm whether your broker supports OTC trading. Emerging market stocks are more special: you must enable a dedicated emerging market trading function, sign a risk disclosure statement, and you can only trade in cash shares (1000 shares per board/lot). They must be traded on a negotiated-price basis rather than through automatic matching.

Regarding investment pros and cons, listed stocks have great return potential. Many companies also pay dividends, and they can help hedge against inflation. The downside is that you need to spend time researching, and market volatility involves risks. OTC stocks have a wide range of choices and their share prices are relatively cheaper, but regulation is limited, trading volume is low, you may run into situations where there are no buyers, and volatility is also higher.

For beginners, the recommendation is to start with listed stocks and not rush into OTC stocks. Before investing, evaluate how much spare money you have, do your homework, and set clear goals—this is how you can avoid being thrown off by short-term fluctuations. Treat emerging market stocks as an advanced course rather than a first choice for beginners.