OTC Markets Group: История и особенности внебиржевой торговли ценными бумагами.

Company operating an electronic inter dealer securities quotation system

The company was first established in 1913 as the National Quotation Bureau (NQB). For decades, the NQB reported quotations for both stocks and bonds, publishing the quotations in the paper based Pink Sheets and Yellow Sheets respectively. The publications were named for the color of paper on which they were printed. NQB was owned by CCH from 1963 to 1993. In September 1999, the NQB introduced the real time Electronic Quotation Service. The National Quotation Bureau changed its name to Pink Sheets LLC in 2000 and subsequently to Pink OTC Markets in 2008. The company eventually changed to its current name, OTC Markets Group, in 2010. Today, a network of 89 broker dealers price and trade a wide spectrum of securities on the OTC Markets platform. To be quoted on the platform, companies are not required to file with the SEC, although many choose to do so. A wide range of companies are quoted on OTC Markets, including firmly established foreign firms, mostly through American depositary receipts (ADRs). In addition, many closely held, extremely small and thinly traded U. S. companies have their primary trading on the OTC Markets platform. Many foreign issuers adhere to the listing requirements of qualified foreign stock exchanges and make their home country disclosure available in English. There are also a significant number of U. S. based issuers who are current in their reporting to regulators such as the U. S. Securities and Exchange Commission (SEC) or make available ongoing quarterly and audited annual financial reports through OTC Markets Group. Many companies in the Pink market tier of the OTC categorization system do not meet the United States' listing requirements for trading on a stock exchange such as the New York Stock Exchange or NASDAQ. Many of these issuers do not file periodic reports or make available audited financial statements, making it very difficult for investors to find reliable, unbiased information about those companies. For these reasons the SEC views many of the lower tier companies traded on OTC Markets as "among the most risky investments" and advises potential investors to heavily research the companies in which they plan to invest. Securities trading on the OTCQB and higher tiered OTCQX trading marketplaces have status of Blue Sky secondary trading exemptions in 33 states and brokers may recommend such securities to their clients like securities listed on national stock exchanges.

OTC Markets Group designates securities in one of three markets to indicate the level of financial and corporate disclosure provided by the companies using its quotation system. Apart from the OTCQX market, which has rules that include financial requirements, the designations do not signify issuer quality or merit of any security. Designation is based on the level and timeliness of a company's disclosure and OTCQB and any of the Pink categories can include both high quality as well as speculative, distressed, or questionable companies. Strict promotion policies have been enacted to flag these companies and deny their application for trading if they engage actively in campaigns marked by misleading information or manipulative promotions. The OTCQX and OTCQB markets are considered 'Established Public Markets' by the SEC for the purpose of determining the public market price when registering securities for resale with the SEC in equity line financings. OTC Markets Group can facilitate electronic trading with its SEC registered Alternative Trading System known as OTC Link ATS.

The OTCQX market includes both multinational companies seeking access to U. S. investors, and domestic growth companies. To be traded on this tier, companies must undergo a qualitative review by OTC Markets Group. Companies are not required to be registered with or reporting to the SEC, but they must post financial information with OTC Markets Group. In addition, U. S. companies must be ongoing operations (i. e., no shells) and may not be in bankruptcy, while foreign issuers must meet the requirements of qualified foreign exchanges. Additional oversight of OTCQX securities is provided by requiring every issuer to be sponsored by approved third party investment banks or law firms, called OTCQX Sponsors. as of 2023, 658 securities were available for trading on the OTCQX exchange, 478 of these being international companies and 180 of these being U. S. companies.

The OTCQB market contains a one penny ($0.01) bid price requirement "intended to remove companies that are most likely to be the subject of dilutive stock fraud schemes and promotions". Each company verifies via an annual OTCQB Certification, signed by the company CEO or CFO, that their company information is current, including information about a company's reporting status, company profile, information on management and boards, major shareholders, law firms, transfer agents, and IR / PR firms. Investor confidence improves when there is more information about a company's ownership structure, professional advisors and service providers. This certification will be required for any security newly qualified to be publicly quoted by a broker dealer under SEC Rule 15c2 11, or when a Pink traded company becomes a current SEC reporting company, beginning May 1, 2014. International Reporting companies are also allowed to upgrade from Pink to OTCQB if they publish their 12g3 2(b) compliant disclosure online and verify their company profile. There is an annual fee for the OTCQB market of $12,000 per year and a one time $2,500 application fee. as of 2023, 1,216 securities were available for trading on the OTCQB exchange.

Pink is an open market that has low financial standards or reporting requirements. The stock of companies in the Pink tier are not required to be registered with the SEC. Companies in this category are further categorized by the level and timeliness of information they provide to investors and may have current or limited public disclosure. These were both glamorized and denigrated in the film The Wolf of Wall Street.

Companies submitting regular Quarterly and Annual Reports go into the Current category. This category can still include shell companies or development stage companies with little or no operations as well as companies without audited financial statements. Companies in this category must not only have Quarterly reports duly posted every three months, but most have Annual reports for at least the preceding two years on file. as of 2023, there were 6,705 securities under Pink Current. and requires submission of Form 211 to the FINRA OTC Compliance Unit. In 2019, amendments were proposed to 15c2 11, which had not been significantly amended since 1991. contains rules on quoting OTC securities on the OTCBB, but the OTCBB has diminished in importance and by 2016 less than 2% of OTC trades occurred on the OTCBB, as opposed to OTC Markets. In 2014, FINRA proposed to remove Rule 6500 and eliminate the OTCBB, but withdrew the rule and in 2016 proposed to update the OTCBB to provide a backup system in case quotation is disrupted or nonexistent.

Many of the stocks traded OTC are microcap stocks, also known as penny stocks, which are known for fraudulent microcap stock fraud and penny stock scams. After the passage of Sarbanes Oxley Act in 2002, some companies delisted and became OTC to save costs and avoid certain regulations, although OTC companies have faced pressure to improve disclosure.

The OTC Bulletin Board (OTCBB) was only a listing of securities that are also traded "over the counter" similar to the OTC Markets. The OTCBB has diminished in importance, with very little activity, but was previously retained as possible last resort system in case of disruption.

Securities that are not listed on any stock exchange nor formally quoted on OTC Markets or OTCBB are considered to be in the grey market. Unsolicited transactions are processed independently and not centrally listed or quoted. Trades are reported to a self regulatory organization (SRO), which then passes the data on to market data companies. The grey market is also called OTOTC or Other OTC. as of 2023, there were 1,426 securities in the grey market.

The Promotion Data Product provides market professionals and investors with active and historical promotion data for OTCQX, OTCQB, Pink and Grey securities.