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To: Jim Bishop who wrote (68998)	10/31/2000 12:19:33 AM
From: Jim Bishop	Read Replies (1) \| Respond to of 150070

:-) 69,000 Automation and Listing Requirements in the OTCBB - A Look at a Recent Article By Giando Argentina Published by OTCNN.com 10/30/2000 09:58 AM EST An article worth mentioning, written by Matthew Goldstein on SmartMoney.com, explores the OTCBB with the recent changes in regulations and future changes being discussed to ‘protect’ the investing public. It is always interesting to see what point of view the mainstream press uses to describe the OTCBB. The article makes mention, among other things, of the incredible speculation that occurred in the OTCBB as the NASDAQ was reaching the 5000 mark. It also makes mention of the antiquated order entry system that the Market Makers had in place to handle an explosion in trading volume during the early months of this year. Describing how Market Makers and brokers relied on telephone communication for order execution, Matthew Goldstein, wrote, “many trades never got executed, or some got completed at prices far different from the quotes investors saw on their computer screens. Angry investors cried foul and complained to regulators. Meanwhile, conspiracy theorists began spinning some far-fetched tales on online message boards about evil market makers and trading firms secretly manipulating the prices of Bulletin Board stocks.” The recent NASD proposal to automate the OTCBB, as the article stated, is in preparation for the next onslaught of OTCBB speculation. I have previously written about some possible questions regarding OTCBB automation, mainly the question of automated order fills on very low priced stocks and the possibility of investors having to enter many separate orders for a complete fill during a moving market. Otherwise, automation would definitely improve the current system of telephone communication for processing retail orders. Another point of interest found in the article is about further regulation aimed at the companies quoted on the OTCBB. Mr. Goldstein states, “one of the things regulators are considering is converting the Bulletin Board into a ‘listed’ market — just like the NASDAQ and NYSE. In a listed market, companies must comply with a series of requirements before their stocks are permitted to trade. Some of these include maintaining a minimum stock price, issuing periodic reports to shareholders and appointing a designated number of independent corporate directors. Regulators also would have greater authority to halt trading in a Bulletin Board stock and investigate trading irregularities.” That is definitely an interesting idea. Turning the OTCBB into a listed market. If that idea is realized, the OTCBB will barely resemble what it is today, and in my opinion it would be a mistake. If I wanted to invest in a listed market then I would participate in the NYSE and NASDAQ NM, but for the most part the OTCBB is where I spend the majority of my time. Investors that long for the day that the OTCBB is subject to the same regulations as the other markets may have a big surprise. If the requirements become stricter for OTCBB companies we could lose many more than were lost do to the Eligibility Rule, which required companies to file simple financial statements on a periodic time frame. At that point then the lament from the conspiracy theory investors would again be that the SEC is unfairly targeting small start up businesses. Unfortunately, many times when its time for the government to enact regulation it becomes very difficult for the public to pick and chose which regulations they like and which ones they do not like. The OTCBB has become a place where companies with very little resources can fund an idea, with that, inevitably you end up with bad apples that are simply looking to the OTCBB as a way to convert paper certificates into cash in their bank account. To weed out the bad apples we may end up weeding out much more. As always greed will always be the worst enemy of the investor and we will never be able to regulate that.