Investor's wiki
en English
Navigation
Home Glossary
InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
Disclaimer Terms of Use Privacy Policy Cookie Policy
Navigation
Home Glossary
InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
Disclaimer Terms of Use Privacy Policy Cookie Policy

OTC Pink

OTC Pink
TradingStock TradingStock Trading Strategy and Education

What Is OTC Pink?

The OTC Pink, presently branded as the Pink Open Market, is the least and most speculative tier of the three marketplaces for the trading of over-the-counter (OTC) stocks. Each of the three tiers are given and worked by the OTC Markets Group. This marketplace offers to trade in a large number of equities through any broker and remembers companies for default or financial distress.

Since it has no disclosure requirements, the arrangement of OTC Pink companies is from data given by the company. OTC Markets Group presently markets OTC Pink as the Pink Open Market, however the historical name actually perseveres.

Figuring out OTC Pink

The over-the-counter (OTC) market is a decentralized market where securities, not listed on major exchanges, are traded straight by a network of dealers. Rather than giving an order matchmaking service like the NYSE, these dealers carry inventories of securities to work with any trade orders. Since data was initially imprinted on pink paper, the OTC Pink is additionally alluded to as the Pink Sheets.

The OTC Pink, as well as its friend tiers, OTCQX and OTCQB, is run by OTC Link. The connection is an electronic inter-dealer quotation and trading system developed by OTC Markets Group. Registered with the SEC as a broker-dealer, OTC Link is likewise a alternative trading system (ATS).

OTC Link permits broker-dealers not exclusively to post and spread their statements yet additionally to arrange trades through the system's electronic informing capacity. This feature empowered it to supplant the Over-the-Counter Bulletin Board (OTCBB), which was a quotation-just system.

Regulation of the OTC Pink Marketplace

In view of the variable, self-reporting nature by OTC Pink companies, they are classified in light of the quality and quantity of data they give to investors. Classification is as follows.

  • Current Information companies are those that follow the International Reporting Standard or Alternative Reporting Standard. These companies make filings publicly accessible through the OTC Disclosure and News Service.
  • Limited Information companies remember troubled firms for financial distress, bankruptcy, or those with accounting issues. This category likewise incorporates companies that are reluctant to meet the OTC Pink Basic Disclosure Guidelines.
  • No Information companies are those businesses that give no disclosure by any means.

All broker-dealers that trade on the OTCQX, OTCQB, and OTC Pink securities must be Financial Industry Regulatory Authority (FINRA) individuals. Further, they must register with the SEC and are subject to state securities regulations. Along these lines, likewise with exchange-traded securities, investors trading OTC securities are protected from a deceptive broker-dealer's unlawful practices by a similar SEC and FINRA rules like Best Execution, Limit Order Protection, Firm Quotes, and Short Position Disclosure.

Who Should Invest Through OTC Pink?

OTC Pink accommodates transparent trading and best execution, despite the fact that there are no financial standards or disclosure requirements. The marketplace trades a large number of domestic and foreign companies including penny stocks, shell companies, distressed companies, and dark companies that can't or won't give company data to investors.

As a result of the lack of reporting requirements, just professional and sophisticated investors with a high risk-tolerance ought to trade here. Investors ought to perform all the appropriate due diligence by investigating the companies they are thinking about and inspecting all business activities.

Highlights

  • OTC Pink, otherwise called the "pink sheets," is the most speculative of OTC Markets Group's platforms.
  • Due to the wide assortment of companies listed on OTC Pink, including dark companies, delinquent companies, and more terrible, just sophisticated investors with a high risk tolerance ought to think about it.
  • Companies on OTC Pink are not held to specific disclosure requirements or high financial standards seen with the stocks listed on major exchanges.