Might as well copy it again on the G&G thread.
Care of otcbb.com
Info on the OTC Bulletin Board
Overview
The OTC Bulletin Boardr (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 Nasdaqr 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).
History
In June 1990, the OTCBB began operation, on a pilot basis, as part of important market structure reforms to provide transparency in the OTC equities market. The Penny Stock Reform Act of 1990 mandated the U.S. Securities and Exchange Commission (SEC) to establish an electronic system that met the requirements of Section 17B of the Exchange Act. The system was designed to facilitate the widespread publication of quotation and last-sale information. Since December 1993, firms have
been required to report trades in all domestic OTC equity securities through the Automated Confirmation Transaction ServiceSM(ACTSM) within 90 seconds of the transaction. In April 1997, the SEC approved the operation of the OTCBB on a permanent basis with some modifications, and in May 1997, DPPs became eligible for quotation on the OTCBB. In April 1998, all foreign securities and ADRs that are fully registered with the SEC become eligible for the display of real-time quotes, last-sale prices, and volume information on the OTCBB.
Features
The OTCBB:
provides access to more than 6,200 securities;
includes more than 420 participating Market Makers;
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.
Comparison of Nasdaq and OTCBB*
The OTCBB is a quotation medium for subscribing members, not an issuer listing service, and should not be confused with The Nasdaq Stock MarketSM. 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 IITM The OTCBB is unlike The Nasdaq Stock Market in that it:
does not impose listing standards or requirements;
does not provide automated trade executions;
does not maintain relationships with quoted issuers; and
does not have the same obligations for Market Makers.
Feature or Requirement OTCBB Nasdaq
Qualitative and quantitative listing requirements No Yes
Listing and maintenance fees to issuers No Yes
Requirements to maintain quotation or listing No Yes
Real-time electronic quotes for domestic issues Yes Yes
Minimum Form 211 or listing processing time 3 days 6-8 weeks**
* The OTCBB is separate and distinct from The Nasdaq Stock Market.
** A Form 211 is not required for listing on Nasdaq; however, the average time of approval for listing on Nasdaq is 6-8 weeks.
The OTCBB is distinct from the Pink Sheets. The "Pink Sheets"r are operated by the National Quotation Bureau, LLC (NQB) and are a static paper quotation medium printed weekly and distributed to broker/dealers. An electronic version of the Pink Sheets is updated once a day and disseminated over market data vendor terminals. The
Pink Sheets are not owned or operated by The Nasdaq Stock Market, Inc.
Market Data Dissemination
The following OTCBB data is disseminated through market data vendor terminals and Web sites for display to customers worldwide:
dynamic last-sale and volume information for domestic securities, foreign securities and ADRs;
end-of-day high, low, close, and volume on DPPs;
bids, offers, and indications of interest displayed by specific Market Makers;
inside quotes for domestic securities, foreign securities and ADRs when available;
indicative quotes for DPPs;
and Market Makers' telephone numbers.
In addition, all Nasdaq Workstation II subscribers (order-entry firms and Market Makers) may view all OTC Bulletin Board information on their workstations without incurring additional charges.
Market Maker Benefits
Participating Market Makers may:
register in as many securities as desired;
update bid and ask quotations on a real-time basis for domestic securities, foreign securities and ADRs and make twice daily quote updates for DPPs;
enter one-sided or two-sided quotes;
attract bids through "offer-wanted" (OW) entries and offers through "bid-wanted" (BW) entries;
and advertise an unsolicited interest in a particular security without specifying a price.
Registering to Make Markets in OTCBB Securities
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. The Market Maker must submit a Form 211 to the NASD OTC Compliance Unit along with two copies of the required issuer information no less than three business days prior to publication of a
quote on the OTC Bulletin Board. Once cleared, Nasdaq Market Data Integrity will notify the Market Maker that it has been registered in the security and may enter a quote.
Ineligible Securities
Every OTC security not currently quoted on the OTC Bulletin Board is considered "ineligible" until a Market Maker submits a Form 211 or a 15c2-11 Exemption Form.
After clearance, the security is granted "eligible" status.
Eligible Securities
If a security has eligible status, it means one or more Market Makers has received clearance to quote the issue on the OTC Bulletin Board within the last 30 days. Any other participating Market Maker that wishes to quote the issue must also submit a completed Form 211. During the "eligible" period, a frequency-of-quotation test is
administered. The test is described below. Until the test is satisfied, all Market Makers must continue to submit a completed Form 211.
Active Securities
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.
Quotation Regulations
The OTC Bulletin Board is monitored by an on-line market surveillance system to help ensure compliance with the existing rules of the SEC and the National Association of Securities Dealers, Inc. (NASDr). Unless there is an exemption, participating Market Makers must comply with the requirements of SEC Rule 15c2-11 on a security-by-security basis to be eligible to quote on the OTCBB.
Reporting Requirements
Market Makers
All trades in domestic equity issues, Canadian issues and ADRs must be reported within 90 seconds through ACT. All other trades may be reported T+1. Please refer to NASD Notice to Members 93-62 and Rule 6600 for a detailed explanation of the requirements for reporting OTC equity trades.
Issuers
Nasdaq has no business relationship with the issuers quoted in the OTC Bulletin Board.
These companies do not have any filing or reporting requirements with The Nasdaq Stock Market, Inc., or the NASD. Limited phone, contact, and address information is available in the 1998 OTC Bulletin Board Fact Book and Company Directory, which is accessible from the Trading Data area of this Web site.
Issuer Information
Only Market Makers can apply to quote securities on this service. Issuers may contact an authorized OTCBB Market Maker for sponsorship of a security on the OTCBB.
The OTCBB does not charge issuers a fee for being quoted on the service. NASD Rules prohibit Market Makers from accepting any remuneration in return for quoting issuers' securities on the OTCBB or any similar medium. |
