OTC Bulletin Board

The OTC Bulletin Board or OTCBB is an interdealer electronic quotation system in the United States that displays real-time quotes, last-sale prices, and volume information for many over-the-counter (OTC) equity securities that are not listed on the NASDAQ stock exchange or a national securities exchange. Broker-dealers who subscribe to the system can use the OTCBB to look up prices or enter quotes for OTC securities. According to the SEC, "fraudsters often claim or imply that an OTCBB company is a Nasdaq company to mislead investors into thinking that the company is bigger than it is."[1]

FINRA runs and provides regulatory services to the OTCBB. The OTCBB formerly collected 100% of quotes, but that number has declined with the rise of its competitor Pink OTC Markets. In September 2009, FINRA announced that it would be selling the OTCBB.[2] Pink OTC Markets was the leading contender for purchasing the OTCBB, but terms could not be reached between itself and FINRA.[3] In September 2010, FINRA announced that it had reached terms for the sale of the OTCBB with well known investment bank Rodman & Renshaw. Along with the sale of the OTCBB and, in an effort to provide uniform regulation to all OTC issues and, subsequently, transparency to the OTC market, FINRA has proposed a "quotation consolidation system." Under the quotation consolidation system, FIRNA would require dealers to report all of their quotes to the quotation consolidation system, regardless of the market upon which they were originally quoted. This would enable FINRA to have access to all quotes in OTC issues and regulate the OTC market in its entirety. [4] Pink OTC argues this is anti-competitive and an abuse of FINRA's authority.[3]

Companies quoted on the OTCBB must fully report (i.e. current with all required SEC filings) but have no market capitalization, minimum share price, corporate governance or other requirements to be quoted. Companies which have been "de-listed" from stock exchanges for falling below minimum capitalization, minimum share price or other requirements often end up being quoted on the OTCBB.

Stock of non-reporting companies (those without current SEC filings) may be quoted in the Pink Sheets. Most OTCBB companies are dually quoted, meaning they are quoted on both the OTCBB and the Pink Sheets.

Stocks traded in OTC markets such as the OTCBB or Pink Sheets are usually thinly traded microcap or penny stocks, and both retail and institutional investors generally avoid them, because of fears that share prices are easily manipulated and there exists a potential for fraud. The SEC issues stern warnings to investors to beware of common fraud and manipulation schemes. As such, most companies choose to list on more established exchanges such as the AMEX, NYSE, or NASDAQ once eligible. FINRA believes that the proposed "quotation consolidation system" would enhance transparency, thereby decreasing the potential for price manipulation or fraud.

See also

References

  1. ^ SEC warning
  2. ^ Over-the-Counter Bulletin Board (OTCBB) Sale Announcement. OTCBB.com
  3. ^ a b FINRA Proposal Riles OTC Market. Traders Magazine.
  4. ^ While FINRA already conducts regulatory activities on OTCBB issues (FINRA DOES NOT conduct regulatory activity on Pink OTC Market issues), it cannot regulate trades which take place on other markets.

External links



Wikimedia Foundation. 2010.

Look at other dictionaries:

  • OTC Bulletin Board — (OTCBB) An electronic quotation service regulated by the US National Association of Securities Dealers that provides real time quotes for over the counter equity securities. The securities quoted on the OTCBB include non US equity issues and… …   Law dictionary

  • OTC Bulletin Board — Das OTC Bulletin Board (OTCBB) ist eine amerikanische Handelsplattform, auf der außerbörsliche Handelsgeschäfte (OTC – Over the counter) festgehalten werden. Ähnlich der Xetra Handelsplattform ist dieses eine elektronische Handelsplattform in der …   Deutsch Wikipedia

  • OTC Bulletin Board — L OTC Bulletin Board ou OTCBB est un système de cotation électronique aux États Unis qui affiche les informations boursières (actions en temps réel, etc.) des échanges réalisés directement entre le vendeur et l acheteur, sans passer par la Bourse …   Wikipédia en Français

  • OTC Bulletin Board — An electronic quotation listing of the bid and asked prices of OTC stocks that do not meet the requirements to be listed on the Nasdaq stock listing system. Bloomberg Financial Dictionary …   Financial and business terms

  • Over-the-counter Bulletin Board Market — USA Over the counter Bulletin Board Market, Also known as the OTC Bulletin Board. An electronic screen based market maintained by NASDAQ for equity securities that, among other things, are not listed on NASDAQ or any primary US national… …   Law dictionary

  • Over-The-Counter Bulletin Board - OTCBB — A regulated electronic trading service offered by the National Association of Securities Dealers (NASD) that shows real time quotes, last sale prices and volume information for over the counter (OTC) equity securities. Companies listed on this… …   Investment dictionary

  • OTC Markets Group — OTC Markets Group, Inc. informally known as Pink Sheets is a private company that provides services to the U.S. over the counter (OTC) securities market including electronic quotations, trading, messaging, and information platforms. According to… …   Wikipedia

  • OTC — may refer to: Oakwood Technology College Owatonna Tool Company Oklahoma Tax Commission Odenton Town Center Officer in Tactical Command Officer Training Corps Offshore Technology Conference Ohio Turnpike Commission Okefenokee Technical College The …   Wikipedia

  • OTC — See: over the counter. The New York Times Financial Glossary over the counter (OTC) Purchases and sales of financial instruments that do not take place in organized exchanges such as the New York Stock Exchange or the Chicago Board of Trade are… …   Financial and business terms

  • OTC — Cette page d’homonymie répertorie les différents sujets et articles partageant un même nom. OTC peut signifier : Office des transports de la Corse Office du Tourisme et des Congrès Over the counter (économie) Over The Counter (médecine)… …   Wikipédia en Français

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.