OTC Bulletin Board

by · June 12, 2012

The OTC Bulletin Board® (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equity securities. An OTC equity security generally is any equity that is not listed or traded on NASDAQ or a national securities exchange.  OTCBB securities include national, regional, and foreign equity issues, warrants, units, American Depositary Receipts (ADRs), and Direct Participation Programs (DPPs).

Features

The OTCBB:

  • Provides access to more than 3,300 securities;
  • Includes more than 230 participating Market Makers;
  • Electronically transmits real-time quote, price, and volume information in domestic securities, foreign securities and ADRs; and
  • Displays indications of interest and prior-day trading activity in DPPs.

History

In June 1990, the OTCBB began operation, on a pilot basis, as part of important market structure reforms to provide transparency in the OTC equities market. The Penny Stock Reform Act of 1990 mandated the U.S. Securities and Exchange Commission (SEC) to establish an electronic system that met the requirements of Section 17B of the Exchange Act. The system was designed to facilitate the widespread publication of quotation and last-sale information. Since December 1993, firms have been required to report trades in all domestic OTC equity securities through the Automated Confirmation Transaction ServiceSM(ACTSM) within 90 seconds of the transaction.

In April 1997, the SEC approved the operation of the OTCBB on a permanent basis with some modifications, and in May 1997, DPPs became eligible for quotation on the OTCBB.  In April 1998, all foreign securities and ADRs that are fully registered with the SEC became eligible for the display of real-time quotes, last-sale prices, and volume information on the OTCBB.

On January 4, 1999, the SEC approved the OTCBB Eligibility Rule. Securities not quoted on the OTCBB as of that date will be required to report their current financial information to the SEC, banking, or insurance regulators in order to meet eligibility requirements. Non-reporting companies whose securities were already quoted on the OTCBB will be granted a grace period to comply with the new requirements. Those companies will be phased in beginning in July 1999 and by June 2000, current financial information about all domestic companies that are quoted on the OTCBB will be publicly available.

The OTCBB is separate and distinct from The NASDAQ Stock Market

The OTCBB is a quotation medium for subscribing members, not an issuer listing service, and should not be confused with The NASDAQ Stock MarketSM. OTCBB securities are traded by a community of Market Makers that enter quotes and trade reports through a highly sophisticated, closed computer network, which can be accessed through the NASDAQ Workstation. The OTCBB is unlike The NASDAQ Stock Market in that it:

  • Does not impose listing standards;
  • Does not provide automated trade executions;
  • Does not maintain relationships with quoted issuers; and
  • Does not have the same obligations for Market Makers.

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