Dear George: Why do some companies list their stock on the New York Stock Exchange while others continue to trade over-the-counter?
, Rick, San Diego
Dear Rick: Listing on the New York Stock Exchange has long been considered a symbol of prestige. Any company that was able to meet the strict listing requirements established by the NYSE was thought to be qualified for membership in this elite club. However, over the years, that has changed and many companies who could qualify for NYSE listing choose not to.
To qualify for listing on the exchange a company must have a market value of $40 million, at least 1.1 million shares of stock outstanding and annual earnings of a minimum of $2.5 million. The stock also needs to trade a certain volume that is determined through a complicated formula.
Listing on the NYSE is not done for free. An annual membership fee is determined based on the trading activity in the stock. It is this extra cost that has kept many companies from switching over to the NYSE from the Nasdaq trading system. Microsoft, the largest publicly traded company in the world, has long said it cannot justify paying a membership fee to the NYSE and will stay as part of the Nasdaq.
There was a time when the over-the-counter market was considered to be the wrong side of the tracks on Wall Street. Smaller companies traded their stocks there because they couldn’t qualify for the big show. Often a company would take the intermediary step of listing on the American Stock Exchange, which had more modest requirements, before trying to make it to the NYSE.
Today the Nasdaq is probably the most efficient trading arena for stocks. The system is completely automated and all trades are executed electronically. Unlike the NYSE, it does not have a trading floor.
Earlier this year the Nasdaq and the American Stock Exchange merged their activities. This saved both operations a significant amount of money and many people believe it’s just a matter of time before they unite with the NYSE.
Dear George: I recently discovered an old bond certificate that belonged to my father. It had coupons attached that represented the interest payments on the bond. Is it still possible to collect on those payments?
, Helen, Poway
Dear Helen: Most municipal bonds used to be issued in bearer form, which means there was no registered owner for the bond. In order to collect interest the bondholder would actually clip the coupon that represented six months worth of interest and take it to the bank. Each coupon was dated to represent a certain time period.
The coupon bonds began to disappear about 20 years ago when the laws changed and required the security to be issued in the name of a registered owner. Rather than clip coupons, the payments were mailed directly to the registered owner.
If your bond has not matured, you could probably take the old coupons to the bank and redeem them. The bank may want to see some proof of ownership and that could get a little complicated. If your father is still alive then there shouldn’t be any problem. If he died, you may have to prove that you are the rightful new owner. A death certificate may do the job.
If the bond has matured the best thing to do would be to write to the treasurer for the municipality that issued the bond. There may be a way to tender the bond and receive both the principle and interest that is due.
A third option would be to find out if the bond has any collector value. Old coupon bonds are rare items and, depending on the agency that issues the bond, there could be some special value. There are several Web sites that deal in collector stock and bond certificates. Try (www.scripophily.com).
Chamberlin is the host of “Money in the Morning,” heard weekdays from 9 a.m. to noon on Ksdo.com A/M 1130. Send letters to P.O. Box 1969, Carlsbad, CA 92018, or E-mail him at (george@,moneyinthemorning.com).
