Most, if not all of you, know OTCBB means
Over-The-Counter Bulletin Board. But what exactly is the OTCBB?
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).
- provides access to more than 6,500
- includes more than 400 participating
- 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.
Brokers who subscribe to the system can use the
OTCBB to look up prices or enter quotes for OTC securities. Although the
National Association of Securities Dealers, Inc. oversees the OTCBB, the OTCBB
is not part of The Nasdaq Stock Market.
Comparison of Nasdaq
The OTCBB is a quotation medium for subscribing
members, not an issuer listing service, and should not be confused with The
Nasdaq Stock Market. OTCBB securities are traded by a community of Market Makers
that enter quotes and trade reports through a highly sophisticated, closed
computer network, which is accessed through Nasdaq Workstation II™. The OTCBB
is unlike The Nasdaq Stock Market in that it:
- does not impose listing standards;
- does not provide automated trade
- does not maintain relationships with
- does not have the same obligations for
- does not have minimum quantitative listing
- does not have listing and maintenance fees
Like Nasdaq, OTCBB does have real-time electronic
quotes for domestic issues and minimum listing processing time (3 days for OTCBB,
6 to 8 weeks for Nasdaq). Also, like Nasdaq, OTCBB has requirements to maintain
quotation or listing. On January 4, 1999, the SEC approved the OTCBB Eligibility
Rule. Securities not quoted on the OTCBB as of that date have been 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 were granted a grace period to
comply with the new requirements. Since July 199 those companies began being
phased in and as of June 22, 2000, current financial information about all
domestic companies that are quoted on the OTCBB are now publicly available.
The OTCBB operates as a dealer system. As a
result, all securities being quoted on the OTCBB must be sponsored by a
participating Market Maker that registers the security by completing a Form 211
unless an exemption applies. Once cleared, Nasdaq Market Data Integrity will
notify the Market Maker that it has been registered in the security and may
enter a quote. Every OTC security not currently quoted on the OTCBB is
considered "ineligible" until a Market Maker submits a Form
211 or a 15c2-11 Exemption Form. After clearance, the security is granted "eligible"
During the "eligible" period,
a frequency-of-quotation test is administered. An OTCBB-eligible security that
meets the frequency-of-quotation requirement for the so-called "piggyback"
exception is identified in the service as "active." The
frequency-of-quotation test or "piggyback" exception is based
on whether a broker/dealer has itself published quotations in the security in
the applicable interdealer quotation system on at least 12 business days during
the preceding 30 calendar days, with not more than four consecutive business
days without quotations. Once this criteria has been satisfied, authorized
participants may register on-line in a security. As long as the security remains
in an "active" state, any participant may quote the security
without a Form 211 submission.
By the end of June 2000, all U.S. companies whose
securities are quoted on the OTCBB had to file updated financial reports with
the SEC or with their banking or insurance regulators. Companies failing to file
reports will not be allowed to be quoted on the OTCBB. But they may be quoted in
another system, such as the Pink Sheets, which are daily quotes of
over-the-counter securities not listed on Nasdaq or a national securities
At the time the rules went into effect on January
4, 1999, only about half of the 6,500 companies on the OTCBB filed reports with
the SEC. The new rules applied immediately to companies that first appeared on
the OTCBB after January 4. For those companies that were on the OTCBB as of that
date, the new rules have been phased-in over a twelve-month period beginning
July 1, 1999.
If a company has not complied with SEC filing
requirements thirty days before its scheduled phase-in date (or sixty days for
banks and insurance companies not filing reports with the SEC), the National
Association of Securities Dealers, Inc. will add the character "E"
to the company's stock symbol. During these periods, the company can continue to
trade, but it will be removed from the OTCBB if it has not met all filing
requirements by its scheduled phase-in date.