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OTC Bulletin Board and NASDAQ Capital Market

The OTC Bulletin Board® (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equity securities. An OTC equity security generally is any equity that is not listed or traded on NASDAQ® or a national securities exchange. OTCBB securities include national, regional, and foreign equity issues, warrants, units, American Depositary Receipts (ADRs), and Direct Participation Programs (DPPs).


In June 1990, the OTCBB began operation, on a pilot basis, as part of important market structure reforms to provide transparency in the OTC equities market. The Penny Stock Reform Act of 1990 mandated the U.S. Securities and Commission (SEC) to establish an electronic system that met the requirements of Section 17B of the Exchange Act. The system was designed to facilitate the widespread publication of quotation and last-sale information. Since December 1993, firms have been required to report trades in all domestic OTC equity securities through the Automated Confirmation Transaction ServiceSM (ACTSM) within 90 seconds of the transaction.


In April 1997, the SEC approved the operation of the OTCBB on a permanent basis with some modifications, and in May 1997, DPPs became eligible quotation on the OTCBB. In April 1998, all foreign securities and ADRs that fully registered with the SEC became eligible for the display of real-time quotes, last-sale prices, and volume information on the OTCBB.


On January 4, 1999, the SEC approved the OTCBB Eligibility Rule. Securities not quoted on the OTCBB as of that date will be required to report their financial information to the SEC, banking, or insurance regulators in order to meet eligibility requirements. Non-reporting companies whose securities were already quoted on the OTCBB will be granted a grace period to comply with the new requirements. Those companies will be phased in beginning in July 1999 and June 2000, current financial information about all domestic companies that quoted on the OTCBB will be publicly available.


The OTCBB: provides access to more than 3,300 securities; includes more than 230 participating Market Makers; electronically transmits real-time quote, price, and volume information in domestic securities, foreign securities and ADRs; and displays indications of interest and prior-day trading activity in DPPs.


Comparison of the NASDAQ and OTCBB


The OTCBB is a quotation medium for subscribing members, not an issuer listing service, and should not be confused with The NASDAQ Capital Market. OTCBB securities are traded by a community of Market Makers that enter quotes trade reports through a highly sophisticated, closed computer network, which is accessed through NASDAQ Workstation IITM. The OTCBB is unlike The Nasdad Capital Market in that it:

  • does not impose listing standards;
  • does not provide automated trade executions;
  • does not maintain relationships with quoted issuers; and
  • does not have the same obligations for Market Makers.


Feature or Requirement for OTCBB & NASDAQ OTCBB NASDAQ
Minimum quantitative listing requirements No Yes
Listing and maintenance fees to issuers No Yes
Requirements to maintain quotation or listing Yes** Yes
Real-time electronic quotes for domestic issues Yes Yes
Minimum Form 211 or listing processing time 3 days 6-8 weeks***
** Issuers of securities which began quotation on the OTCBB after January 4, 1999 are required to file periodic financial information with the SEC or other regulatory authority to maintain quotation eligibility. 

*** A Form 211 is not required for listing on NASDAQ; however, the average time of approval for listing on NASDAQ is 6-8 weeks. 


In addition, all NASDAQ Workstation II subscribers (order-entry firms and Market Makers) may view all OTC Bulletin Board information on their workstations without incurring additional charges.


Market Maker Benefits

Participating Market Makers may:

  • register in as many securities as desired;
  • update bid and ask quotations on a real-time basis for domestic securities, foreign securities and ADRs and make twice daily quote updates for DPPs;
  • enter one-sided or two-sided quotes;
  • attract bids through “offer-wanted” (OW) entries and offers through “bid-wanted” (BW) entries; and
  • advertise an unsolicited interest in a particular security without specifying a price.


Registering to Make Markets in OTCBB Securities the OTCBB operates as a dealer system. As a result, all securities being quoted on the OTCBB must be sponsored by a participating Market Maker that registers the security by completing a Form 211 unless an exemption applies. The Market Maker must submit a Form 211 to the NASD OTC Compliance Unit along with two copies of the required issuer information no less than three business days prior to publication of a quote on the OTC Bulletin Board. Once cleared, NASDAQ Market Data Integrity will notify the Market Maker that it has been registered in the security and may enter a quote.


Ineligible Securities
Every OTC security not currently quoted on the OTC Bulletin Board is “ineligible” until a Market Maker submits a Form 211 or a 15c2-11 Exemption Form. After clearance, the security is granted “eligible” status.


Eligible Securities
If a security has eligible status; it means one or more Market Makers have received clearance to quote the issue on the OTC Bulletin Board within the last 30 days. Any other participating Market Maker that wishes to quote the issue must also submit a completed Form 211. During the “eligible” period, a frequency-of-quotation test is administered. The test is described below. Until the test is satisfied, all Market Makers must continue to submit a completed Form 211.


Active Securities
An OTCBB-eligible security that meets the frequency-of-quotation requirement for the so-called “piggyback” exception is identified in the service as “active.” The frequency-of-quotation test or “piggyback” exception is based on whether a broker/dealer has itself published quotations in the security in the applicable interdealer quotation system on at least 12 business days during the preceding 30 calendar days, with not more than four consecutive business days without quotations. Once this criterion has been satisfied, authorized participants may register on-line in a security. As long as the security remains in an “active” state, any participant may quote the security without a Form 211 submission.


Quotation Regulations
The OTC Bulletin Board is monitored by an on-line market surveillance system to help ensure compliance with the existing rules of the SEC and the National Association of Securities Dealers, Inc. (NASD®). Unless there is an exemption, participating Market Makers must comply with the requirements of SEC Rule 15c2-11 on a security-by-security basis to be eligible to quote on the OTCBB.


Reporting Requirements


Market Makers
All trades in domestic equity issues, Canadian issues and ADRs must be reported within 90 seconds through ACT. All other trades may be reported T+1. Please refer to NASD Notice to Members 93-62 and Rule 6600 for a detailed explanation of the requirements for reporting OTC equity trades.


NASDAQ has no business relationship with the issuers quoted in the OTC Bulletin Board. These companies do not have any filing or reporting requirements with the NASDAQ Capital Market, or the NASD. However, issuers of securities that begin quotation on the OTCBB after January 4, 1999 are subject to periodic filing requirements with the SEC or other regulatory authority. Limited phone, contact, and address information is available in the Stock Summaries, which are accessible from the Market Statistics area of this Website.


Issuer Information
Only Market Makers can apply to quote securities on this service. Issuers may contact an authorized OTCBB Market Maker for sponsorship of a security on the OTCBB. The OTCBB does not charge issuers a fee for being quoted on the service. FINRA Rules prohibit Market Makers from accepting any remuneration in return for quoting issuers’ securities on the OTCBB or any similar medium.


Requirements for listing on the NASDAQ Capital Market
Requirements Initial Listing Continued Listing Marketplace Rules*
Stockholders EquityNet Income from Continuing Operations

(in latest fiscal year or 2 of the last three fiscal years)

$5 M or $4M 


$2,500,000 /
Rule 5505 (a), (b) 1, 2, 3
Publicly Held Shares (Float) 1,000,000 500,000 Rule 5505 (a), (b) 1, 2, 3
Market Value of Publicly Held Shares $15,000,000
$1,000,000 Rule 5505 (a), (b) 1, 2, 3
Minimum Bid Price $ 4 $1 Rule 5505 (a), (b) 1, 2, 3 Rule 4320 (e) (2) (E)
Shareholders (round lot holders) 300 300 Rule 5505 (a), (b) 1, 2, 3 Rule 4320(e) (4)
Market Makers 3 2 Rules 5505 (a), (b) 1, 2, 3 Rule 4320 (e) (1)
Operating History Market Capitalization 2 Years N/A Rules 5505 (a),(b) 1 , 2, 3
Corporate Governance Yes Yes Rules 5505 (a), (b) 1, 2, 3
1. Companies must meet the bid price, publicly held shares, round lot holders, and market makers requirements as set forth in Rule 5505(a) and at least one of the Standards in Rule 5505(b).


2. Seasoned companies (those companies already listed or quoted on another marketplace) qualifying only under the market value of listed securities requirement must meet the market value of listed securities and bid price requirements for 90 consecutive trading days prior to applying for listing.


3. The term, “listed securities”, is defined as “securities listed on NASDAQ or another national securities exchange.”


4. Publicly held shares is defined as total shares outstanding, less any shares held directly or indirectly by officers, directors or any person who is the beneficial owner of more than 10% of the total shares outstanding of the company. In the case of ADRs, at least 400,000 shall be issued.


5. Round lot holders are shareholders of 100 shares or more. The number of beneficial holders is considered in addition to holders of record.


6. An electronic communications network (ECN) is not considered a market maker for the purpose of these rules.


7. In addition to the above quantitative requirements, companies must comply with all corporate governance requirements as set forth in the Rule 5600 Series.