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 quotation service given by the Financial Industry Regulatory Authority (FINRA) to its buying in individuals for over-the-counter (OTC) trade data for U.S. stocks. Not at all like other OTC platforms, OTCBB was a quotation-just service. In 2020, FINRA announced it was winding down the OTCBB, as the bulk of OTC stock trading happened on OTC Markets Group's platforms. FINRA formally ceased operations of the OTCBB on Nov. 8, 2021.

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

The OTCBB offered traders and investors expert statements, last-sale prices, and volume data for equity securities traded OTC. All companies listed on this platform needed to file current financial statements with the Securities and Exchange Commission (SEC) or another significant federal regulator.

The OTCBB was made in 1990 after the Penny Stock Reform Act of 1990 stipulated that the SEC must foster some sort of electronic quotation system for stocks that couldn't be listed on one of the major exchanges. Stocks that traded OTC were traded among people and market producers utilizing computers and phones.

OTC stocks on the OTCBB were not part of any major exchanges. This was basically on the grounds that OTC stocks will more often than not be small and unstable, which made meeting listing requirements troublesome.

All the more importantly from the trading viewpoint, the bid-ask spread is commonly bigger for these stocks as they ordinarily trade with less frequency than exchange-listed stocks. Just a chosen handful OTCBB stocks effectively moved from the OTC market to a major exchange.

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

Special Considerations

For those small companies that couldn't meet the listing requirements to trade their securities on national exchanges, the OTCBB, and these days the current offerings of OTC Markets Group, offered an important alternative.

Small companies need financing from investors to develop, even however their total market value may very well never rival a mid-cap stock. Investors, thusly, are attracted to the outsized returns that can in any case happen on the OTC market as a portion of these organizations truly do make continuous progress and outsized profits.

While these companies utilize the OTC markets in place of one of the major exchanges, investors need to recall that the OTCBB and OTC Markets Group are not, in fact, actual exchanges yet quotation services. All securities traded OTC are, in reality, traded by a web of market makers who input various statements and trades through a secure computer network that must be gotten to by the people who buy in.

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

As referenced above, essentially all OTC stock statements and trades are currently led on OTC Markets Group's platforms, including OTCQX, OTCQB, and the Pink Open Market.

FINRA filed a rule change in 2020 with the SEC that illustrated 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 primary market for trading OTC securities that report to a U.S. regulator. As it has no base financial standards, the OTCQB frequently incorporates shell companies, penny stocks, and small foreign issuers.

OTCBB versus Pink Sheets

The OTCBB and pink sheets are both quotation services for stocks that trade OTC. The OTCBB was worked by FINRA, while the pink sheets are worked by a private company. The listing standards are generally laxer for the pink sheets. That is, some pink sheet stocks probably won't have been eligible for listing on the OTCBB.

Stocks listed on the OTCBB were typically registered with the SEC (aside from those not legally required to do as such). In the interim, stocks on the pink sheets probably won't file standard reports and probably won't list with the SEC. Past the OTCBB and pink sheets, there are other quotation services. It's likewise conceivable to buy stocks not listed on either straightforwardly from a broker.

The lack of filing requirements for pink sheets stocks make them innately more hazardous.

Rectification — Nov. 26, 2021: A previous rendition of this article misquoted the company name for OTC Markets Group.

Features

• All companies listed on the platform needed to file current financial statements with the Securities and Exchange Commission (SEC) or another pertinent federal regulator.
• The over-the-counter bulletin board (OTCBB) was a regulated quotation service for over-the-counter (OTC) securities given by the Financial Industry Regulatory Authority (FINRA).
• In 2020, FINRA chose to unwind the OTCBB services, as the platforms given by OTC Markets Group had taken the overwhelming majority of U.S. OTC stock trading and data.
• It offered expert statements, last-sale prices, and volume data.
• Just a chosen handful OTCBB stocks effectively moved from the OTC market to a major exchange.

FAQ

Which App Allowed You to Trade on the OTCBB?

No app permitted you to trade on the OTCBB. The OTCBB was a cost citing service. Investors traded stocks through brokerage apps that had their prices quoted on the OTCBB.

How Could You Trade in OTCBB Penny Stocks?

Penny stocks didn't trade on the OTCBB. Penny stocks trade for under $1 per share yet they trade through a brokerage. The OTCBB helped track prices for penny stocks yet didn't work with penny stock trading.

What Was Listed on the OTCBB?

Securities that were listed on the OTCBB incorporated those that traded on the OTC market, like 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 poor liquidity, as they are thinly traded; and the second is the lack of dependable data accessible about the company.

Were OTC Stocks Publicly Traded?

OTC stocks were traded without a broker or central exchange as they were generally too small to be listed on a conventional exchange. A few OTC stocks were viewed as publicly traded, however a few companies on the OTC market were private companies.

Might I at any point Buy OTC Stocks on RobinHood?

OTC stocks are not accessible on RobinHood, albeit the trading app permits the trading of certain penny stocks.