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NASD Announces SEC Approval of OTC Bulletin Board Eligibility Rule
WASHINGTON, Jan. 6 /PRNewswire/ -- 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.
SOURCE: National Association of Securities Dealers, Inc.
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