A listed product is a financial instrument that is traded on a public exchange such as Euronext or the New York Stock Exchange, and which therefore passes through a clearinghouse. Euronext, for example, has more than 800 listed company securities on the Paris Stock Exchange, along with more than 3,000 bonds. These listed products can be traded by institutional investors on any of the world's stock exchanges, including Paris, Brussels, Madrid, Milan, London, Frankfurt, Helsinki, Hong Kong, Tokyo, Sweden or Singapore.
The acronym ETP stands for Exchange-Traded Product. ETP refers to any composite product listed on an exchange, including indices, warrants, exchange-traded funds (ETFs) and closed-end funds. The underlying securities, stocks or bonds, are not usually considered ETPs.
Listed products are usually contrasted with over-the counter (OTC) products, which are traded bilaterally. Listed products, on the other hand, are traded centrally.
Avantages and disadvantages
The great quality of listed products lies in the fact that, thanks to the margin call process, the counterparty risk disappears from these products. Indeed, passing through the secured platform of the exchanges allows investors to avoid the risk of a counterparty’s default as well as any potential loss tied to this default.
Moreover, the listing of these securities on an exchange makes it possible for investors to know the valuation of these products at any given time. By contrast, the OTC market only provides this information on demand and often in a less transparent manner.
On the other hand, due to their standardization, these products do not allow for "customization" and force the investor to choose from a plethora of products, which are nevertheless limited and may not suit their specific needs.