Yellow Sheets
What Are Yellow Sheets?
Yellow sheets are bulletins for bond traders which contain data for corporate bonds listed on the over-the-counter (OTC) market. The sheets contain data on each bond's yield, volume, high, low, closing, and bid-ask spread.
Yellow sheets are distributed by the OTC Markets Group, formerly called the National Quotation Bureau (NQB). The company additionally distributes pink sheets with the equivalent data on stocks that trade over-the-counter.
The two bulletins have been distributed electronically in real-time beginning around 1999.
- Yellow sheets are bulletins that illuminate traders about corporate bonds that are accessible from brokerages as over-the-counter trades.
- Pink sheets are the equivalent for stocks that trade over the counter.
- Yellow sheets and pink sheets are currently electronic services distributed by OTC Markets Group.
- Both rundown securities issued by companies that are not listed on the major public exchanges.
Figuring out Yellow Sheets
Yellow sheets give data about bonds issued by companies that are not listed on a national exchange.
These non-listed companies might be small and mostly secret, or still during the time spent laying out a business. Many couldn't meet the requirements for listing on the public exchanges.
The OTC market is a decentralized system for trading securities. Dealers on the OTC market don't carry on with work from a single physical location, or a centralized market. The yellow sheets give contact data to the brokerages that make a market for these bonds.
Yellow sheet bonds are traded by this network of market makers through a closed network that can be gotten to in printed version or online by subscribers. To purchase a specific bond, they might involve the contact data in the yellow sheets to contact the fitting brokerage.
Yellow-Sheet Bonds
Bonds listed in the yellow sheets are generally viewed as riskier than other fixed-income securities.
The companies giving these bonds are not listed on any public U.S. stock exchange and therefore are not subject to the rigid government regulation and publication requirements of listed public companies.
A few deeply grounded foreign companies list in the U.S. through the over-the-counter markets, frequently as American Depositary Receipts (ADRs).
The bid-ask spread is, naturally, more extensive for bonds listed on yellow sheets to remunerate investors for the risks implied in these elements.
The principal risk is that the company will fail and default on the bonds. There additionally is added liquidity risk. There might be almost no market for the bond in the event that the investor wishes to sell it.
Yellow Sheets and the OTC Markets Group
The National Quotation Bureau (NQB) was laid out in 1913 to furnish investors with data in regards to OTC stocks and bonds. In its initial years, the NQB distributed data on paper of various tones, and the bulletins before long carried a similar name as the paper tone. Stock statements appeared on the pink sheets, and bond statements were distributed on the yellow sheets.
In 1963, the NQB was sold to Commerce Clearing House. In 1999, the NQB progressed from printing its popular paper bulletins to operating as a basically electronic operation. The NQB has since changed its name to OTC Markets Group.
