Proposed rule change for OTCBB....just not soon enough...mulla711
This proposed rule change will ensure that current financial information about domestic companies that are quoted on the OTCBB is publicly available. Presently,NASD rules require foreign and American Depositary Receipt (ADR) issuers to file periodic reports with the SEC in order to be quoted on the OTCBB. The NASD has proposed to extend that requirement to domestic securities. The rule, if approved, will permit only those companies that report their current financial information to the SEC, banking, or insurance regulators to be quoted on the OTCBB.
This requirement will be effective immediately effective upon approval by the SEC for securities not currently quoted on the OTCBB.
Non-reporting companies whose securities are already quoted on the OTCBB will have between 6 and 18 months (depending on where they fall in a phase-in period) to comply with the new requirements once the rule becomes effective.
If an issuer becomes delinquent in its reports, there will be a grace period of 30 to 60 days (depending on the type of issuer) during which Market Makers may continue to quote the security.
I think it may be going through in march.....
link: nasdr.com
filing # SR-NASD-98-51
excerpt: the rule is 174 pages
(a) Purpose
The NASD has actively studied the OTC market in an effort to address the abuses
in the trading and sales of thinly traded, thinly capitalized (microcap) securities.
These securities are not listed on The Nasdaq Stock Market® (“Nasdaq”) or any
exchange and trade on the OTC Bulletin Board® (“OTCBB”), in the “pink
sheets” published by the National Quotation Bureau, Inc. (“Pink Sheets”), and in
other quotation media where there are no listing requirements. With respect to its
examination of the OTCBB in particular, the NASD noted the lack of reliable and
current financial information about the issuers, and the perception by the public
that the OTCBB is similar to a highly regulated market, such as the registered
exchanges or Nasdaq.1
The OTCBB Service provides a real-time quotation medium that NASD member
firms can use to enter, update, and retrieve quotation information (including
unpriced indications of interest) for equity securities traded over-the-counter that
are neither listed on The Nasdaq Stock Market nor on a primary national
securities exchange. Eligible securities include national, regional, and foreign
equity issues, warrants, units, Direct Participation Programs, and American
Depositary Receipts (ADRs) not listed on any other U.S. national securities
market or exchange. Unlike Nasdaq or registered exchanges where individual
companies apply for listing on the market—and must meet and maintain strict
listing standards—there are no listing standards for the OTCBB, and there
currently is no requirement that issuers of securities on the OTCBB make current,
publicly available reports with the SEC or other regulator. In fact, over half of the
companies that are currently quoted on the OTCBB are not subject to any public
reporting requirements.
The proposed rule change was developed in an effort to balance the benefits that
the transparency of the OTCBB provides with the public need for information
about the issuers being quoted. The NASD is concerned that where there is no
public information available regarding a security, the broad-based automated
display of quotations in that security creates an unjustified perception of
reliability. While the NASD realizes that the new rule may result in the lack of
real-time quotations for those securities that become ineligible for the OTCBB, it
believes that this loss is outweighed by the benefit to investors who would, under
the proposed rule, have access to information about the companies in which they
may invest. In addition, transactions in securities ineligible for the OTCBB
would still be subject to real-time last sale trade reporting. These reports are
publicly disseminated through market data vendors on a real-time basis. |
