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).
OTC Markets Likely to Drop Hundreds of Companies Into the Pinks
In an announcement reportedly emailed to all brokers, transfer agents and OTC Markets participants, the public was made aware of sweeping changes to the OTCQB beginning March 1, 2014. Changes include:
A one penny ($0.01) bid price requirement
A $2,500 application fee.
A $10,000 annual fee.
Annual OTCQB Certification.
These changes are designed to "improve transparency and exclude companies that are most likely to be associated with stock promoters and other nefarious operators."
Justification for the action cites a survey of OTCQB participating companies. The reasons given are that "low priced shells and stock promoters make OTCQB a less attractive marketplace and hinder their ability to attract a wider group of potential shareholders."
"For companies that do not wish to be fully transparent or engage with their public market, we will continue to operate a marketplace for brokers to trade in these securities on the OTC Pink," the announcement read.
Phil Ray of Venturevest Capital says, "This move will significantly increase the cost to companies for raising capital though a public offering, once again hurting the small businessman."