Over-the-Counter Bulletin Board (OTCBB)

What Was the Over-the-Counter Bulletin Board ( OTCBB ) ?

The over-the-counter bulletin board ( OTCBB ) was an electronic citation servicing provided by the Financial Industry Regulatory Authority ( FINRA ) to its subscribing members for nonprescription ( OTC ) trade data for U.S. stocks. Unlike early OTC platforms, OTCBB was a quotation-only service. In 2020, FINRA announced it was winding down the OTCBB, as the bulk of OTC stock trading occurred on OTC Markets Group ‘s platforms. FINRA officially ceased operations of the OTCBB on Nov. 8, 2021 .

Key Takeaways

  • The over-the-counter bulletin board (OTCBB) was a regulated quotation service for over-the-counter (OTC) securities provided by the Financial Industry Regulatory Authority (FINRA).
  • It offered up-to-the-minute quotes, last-sale prices, and volume information.
  • All companies listed on the platform had to file current financial statements with the Securities and Exchange Commission (SEC) or another relevant federal regulator.
  • Only a select few OTCBB stocks successfully moved from the OTC market to a major exchange.
  • In 2020, FINRA decided to wind down the OTCBB services, as the platforms provided by OTC Markets Group had taken the lion’s share of U.S. OTC stock trading and data.

Understanding the Over-the-Counter Bulletin Board ( OTCBB )

The OTCBB offered traders and investors up-to-the-minute quotes, last-sale prices, and volume information for fairness securities traded OTC. All companies listed on this platform had to file stream fiscal statements with the Securities and Exchange Commission ( SEC ) or another relevant federal governor .

The OTCBB was created in 1990 after the Penny Stock Reform Act of 1990 stipulated that the SEC must develop some type of electronic quotation system for stocks that could not be listed on one of the major exchanges. Stocks that traded OTC were traded between individuals and grocery store makers using computers and telephones .

OTC stocks on the OTCBB were not part of any major exchanges. This was primarily because OTC stocks tend to be small and volatile, which made meeting listing requirements unmanageable .

More importantly from the trade point of view, the bid-ask scatter is typically larger for these stocks as they typically trade with less frequency than exchange-listed stocks. entirely a blue-ribbon few OTCBB stocks successfully moved from the OTC market to a major exchange .

The pink sheets are a privately held company, while FINRA provided the OTCBB service.

particular Considerations

For those humble companies that could not meet the list requirements to trade their securities on national exchanges, the OTCBB, and nowadays the current offerings of OTC Markets Group, offered an authoritative alternate .

small companies need financing from investors to grow, even though their total market value might never rival a mid-cap stock. Investors, in go, are attracted to the outsized returns that can distillery occur on the OTC grocery store as some of these firms do find ongoing success and outsize profits .

While these companies use the OTC markets in stead of one of the major exchanges, investors need to remember that the OTCBB and OTC Markets Group are not, in fact, actual exchanges but quotation services. All securities traded OTC are, in world, traded by a web of marketplace makers who input different quotes and trades through a batten calculator network that can only be accessed by those who subscribe .

Phasing Out the Over-the-Counter Bulletin Board ( OTCBB )

As mentioned above, pretty much all OTC stock quotes and trades are now conducted on OTC Markets Group ‘s platforms, including OTCQX, OTCQB, and the Pink Open Market .

FINRA filed a rule deepen in 2020 with the SEC that outlined its proposal to cease the operations of the OTCBB, which became effective Nov. 8, 2021. The OTCQB, in particular, effectively replaced the OTCBB as the main market for trading OTC securities that report to a U.S. regulator. As it has no minimum fiscal standards, the OTCQB often includes shell companies, penny stocks, and small foreign issuers .

OTCBB v. Pink Sheets

The OTCBB and tap sheets are both quotation services for stocks that trade OTC. The OTCBB was operated by FINRA, while the tap sheets are operated by a individual company. The list standards are generally laxer for the pink sheets. That is, some pink sheet stocks might not have been eligible for listing on the OTCBB .

Stocks listed on the OTCBB were normally registered with the SEC ( except for those not legally required to do so ). meanwhile, stocks on the pink sheets might not file regular reports and might not list with the SEC. Beyond the OTCBB and pink sheets, there are other quotation services. It ’ sulfur besides possible to buy stocks not listed on either directly from a broker .

The miss of filing requirements for tap sheets stocks make them inherently riskier .

How Did You Trade in OTCBB Penny Stocks?

penny stocks did n’t trade on the OTCBB. Penny stocks trade wind for less than $ 1 per share but they trade through a brokerage house. The OTCBB helped track prices for penny stocks but did not facilitate penny stock deal .

Which App Allowed You to Trade on the OTCBB?

No app allowed you to trade on the OTCBB. The OTCBB was a price-quoting service. Investors traded stocks via brokerage house apps that had their prices quoted on the OTCBB .

Were OTC Stocks Publicly Traded?

OTC stocks were traded without a broker or central central as they were broadly besides small to be listed on a dinner dress substitution. Some OTC stocks were considered publicly traded, though some companies on the OTC grocery store were secret companies .

What Was Listed on the OTCBB?

Securities that were listed on the OTCBB included those that traded on the OTC market, such as stocks, warrants, units, and ADRs .

Is It Safe to Buy OTC Stocks?

There are two key risks to trading OTC stocks : the first is the hapless liquid, as they are thinly traded ; and the irregular is the miss of authentic information available about the ship’s company .

Can I Buy OTC Stocks on RobinHood?

OTC stocks are not available on RobinHood, although the trading app does allow the trading of certain penny stocks .
Correction—Nov. 26, 2021 : A previous interpretation of this article misstated the caller name for OTC Markets Group.

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