In an unpublicized move, FINRA owned Over the Counter Bulletin Board (OTCBB) is closed for good. The Financial Industry Regulatory Authority (FINRA), a non-profit organization, had been trying unsuccessfully to sell the OTCBB since 2009. On July 27, 2014, FINRA quietly filed with the SEC a proposal to delete rules relating to OTCBB thus ceasing OCTBB operations. The OTCBB was retired on November 17, 2014.
An announcement at finra.org claims that “information currently available on OTCBB.com will become available on the Finra.org website.” Our investigation found no individual stock trade or reporting information available. When pressed, an un-named source at FINRA confirmed that the OTCBB is out of business for good.
Sources indicate the SEC release of October 7, 2014 states: “FINRA proposed to adopt rules: (1) governing the treatment of quotations in OTC equity securities by member inter-dealer quotation systems and addressing fair and non-discriminatory access to such systems; (2) requiring member inter-dealer quotation systems to provide FINRA with a written description of quotation-related data products offered and related pricing information, including fees, rebates, discounts and cross-product pricing incentives; (3) expanding the reporting requirements related to quotation information in OTC equity securities; and (4) deleting the Rule 6500 Series and related rules and thereby ceasing operation of the OTCBB.” (See SEC Release No. 34-72575; File No. SR-FINRA-2014-030)
The FINRA rule release request succeeded in eliminating the OTCBB and imposes governing regulations on the remaining inter-dealer quotation system namely, the OTC Markets comprised of the OTCQX, OTCQB, and Pinksheets.(www.otcmarkets.com).
While NYSE functions as auction markets, the OTC market is dealer-driven. The OTCBB and OTC Markets Group’s OTCQX, OTCQB and OTC Pink marketplaces fall into the latter category, and all stocks trade there as a result of broker-dealers quoting a company’s stock. This compares to the exchanges, where companies must apply and qualify to be listed with the exception of OTCQX, OTC Markets Group's highest marketplace, for which there are qualification requirements.
The Penny Stock Reform Act of 1990 mandated that the SEC create a uniform electronic quotation system for OTC stocks. The OTCBB was created to provide this and now provides real-time securities data for 1,000 securities and is used by 80 market makers. Although FINRA is responsible for overseeing its daily operations, the OTCBB is regulated by the SEC.
The stock market segment that was traditionally referred to as the “Pink Sheets” has undergone many changes over the years. It began with the National Quotation Bureau (NQB) in 1913 and chiefly comprised penny stocks and high-risk offerings that were listed on sheets of pink paper (or yellow paper for bonds), which were distributed to brokers and investors. This continued for decades until the internet boom in the 1990s facilitated widespread electronic dispersion of quotes. NQB introduced its real-time electronic quotation service in 1999 and changed its name to Pink Sheets the following year. Electronic messaging was introduced in 2003. It was then renamed Pink OTC Markets in 2008 and took its present name of OTC Markets Group in 2010. In 2007, it reorganized all stocks previously traded in the Pink Sheets into three separate marketplaces. These marketplaces are based on the quality of the companies’ disclosure, so that investors can more easily access and analyze companies and make informed trading decisions: