NASD Announces SEC Approval of OTC Bulletin Board Eligibility Rule
Washington, D.C.—The National Association of Securities Dealers, Inc. (NASD®),
today announced that the Securities and Exchange Commission (SEC) has approved
the NASD's proposed OTC Bulletin Board Eligibility Rule. This rule permits
only those companies that report their current financial information to the
SEC, banking, or insurance regulators to be quoted on the OTC Bulletin Board®
(OTCBB), offering investors more and better information about OTCBB stocks.
Under the new rule, Market Makers will not be permitted to quote OTCBB-traded
securities unless the issuer has filed periodic reports with the appropriate
regulatory agency. The filing requirement protects investors by ensuring that
they have access to companies' current financial information when considering
investments in OTCBB-traded securities.
“Thorough and accurate information is the foundation of sound investment
decisions,” said Frank G. Zarb, NASD Chairman and Chief Executive Officer. “By
requiring the half of all OTCBB companies that currently do not provide
publicly-available financial reports to join the half that do, we will take a
major step toward improving the quality of the microcap market. We are pleased
that the SEC has approved our proposal to effectively eliminate non-reporting
companies from the OTC Bulletin Board.”
Under the new rule, any domestic company that does not file periodic financial
reports with the SEC, or with banking or insurance regulators, will be
eliminated from the OTCBB after a phase-in period. In April 1998, the SEC
required all foreign securities on the OTCBB to be fully registered with the
SEC in order to remain quoted.
The new requirement applies immediately to any company first quoted on the
OTCBB after January 4, 1999. Securities already quoted on the OTCBB as of
January 4, 1999, will have until at least July 1999 to comply with the new
requirements. The rule will be phased in over a 12 month period beginning in
July 1999 and continuing through June 2000 in alphabetical increments based
upon the company's name as of January 4, 1999. In June 2000, the rule will
apply to all companies on the OTCBB.
The filing requirement also means that these companies are subject to greater
regulatory oversight by the SEC and other regulatory authorities.
The OTC Bulletin Board is a quotation service that displays real-time quotes,
last-sale prices, and volume information in domestic and certain foreign
securities. Eligible securities include national, regional, and foreign equity
issues; and warrants, units, and American Depositary Receipts (ADRs) not
listed on any other U.S. national securities market or exchange. Although the
OTCBB is operated by the NASD, it is unlike The Nasdaq Stock Market® or other
listed markets where individual companies apply for listing and must meet and
maintain strict listing standards; individual brokerage firms, or Market
Makers initiate quotations for specific securities on the OTC Bulletin Board.
Currently, approximately 6,500 securities are quoted on the OTCBB.
For more information about the OTC Bulletin Board, please visit
otcbb.com. |
