- For a market maker to quote a security on OTCBB, the issuer of that security must:
- Be registered with the SEC
- Be current in its required filings
- If an issuer is not compliant, NASDAQ will:
- Append the issuer’s symbol with a fifth character
- Provide notice of a grace period (30 or 60 calendar days)
- Issuers’ securities will be removed from OTCBB if non-compliant upon expiration of grace period
- An issuer can request a hearing to review the removal decision
- Additional information
Requirements for OTCBB Eligibility
NASD Rules 6430 and 6440 prohibit a market maker from quoting a security on the OTC Bulletin Board® (OTCBB) unless the issuer of that security is both:
- Registered with the Securities Exchange Commission (SEC) under Section 13 or 15(d) of the Securities and Exchange Act of 1934 ("Act"), an investment company registered under the Investment Company Act, an insurance company described in Section 12(g)(2)(G) of the Act, or a bank or savings association that is not required to file reports with the SEC; and
- Current in its required filings. To be current, an issuer must have filed its latest required annual filing and any subsequent quarterly filings. These filings must be complete, including any necessary certifications, audit opinions and reviews as may be required by the federal securities laws. In the alternative, an issuer may be deemed compliant if it has filed a Form 10 or a Form 10SB and has cleared all comments by the SEC.
Procedures for Non-Compliance
If NASDAQ® does not have information that an issuer is compliant, it will append the issuer’s symbol with a fifth character of "E". Notification of a symbol change will appear on the OTCBB Daily List prior to the effective date of the change. This fifth character provides notice to market participants that the company is in a grace period pursuant to the rules.
During the grace period quotations may continue to be entered. For companies that file with the SEC, this grace period is for 30 calendar days. Banks and insurance companies that do not file with the SEC are given a grace period of 60 calendar days. The grace period begins on the date the symbol change notification appears on the OTCBB Daily List, not the effective date of the symbol change.
Market makers or other parties who wish to notify NASDAQ of any filing that has been made during the grace period, which would bring the issuer into compliance, may contact NASDAQ by calling 301-978-8095 or by mail at:
OTCBB Filings Department
9600 Blackwell Road, 5th Floor
Rockville, MD 20850
If NASDAQ receives notification and determines that a delinquent issuer is compliant with the filing requirement during the grace period, the fifth character identifier ("E") will be removed. Notification of the symbol change to remove the "E" will appear on the OTCBB Daily List prior to the effective date of the change.
Otherwise, upon expiration of the grace period, the issuer’s securities will be removed from the OTCBB. Deletions will appear on the OTCBB Daily List prior to their effective date.
An issuer can request review of the decision to remove the issuer’s securities by an independent hearings panel. A request for a hearing will stay the determination to remove the securities pending a determination by the panel. Such issuer requests should be faxed to the Hearings Department at 301.978.8080 no later than 4:00 p.m., Eastern Time, two business days prior to the scheduled removal date.
All hearings will be governed by the Rule 9700 Series of the NASD Rules. Note that hearings are limited to the question of whether the issuer is current in its required filings.
You may wish to share this information with any issuer for which your firm makes a
market that ceases to comply with the eligibility rule.
If you have any questions, or would like more information regarding OTCBB, please contact:
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, ADRs, and Direct Participation Programs (DPPs).
NASDAQ is the world’s largest electronic stock market. With approximately 3,300 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market. It is home to category-defining companies that are leaders across all areas of business including technology, retail, communications, financial services, transportation, media and biotechnology industries. NASDAQ is the primary market for trading NASDAQ listed stocks. Approximately 51% of NASDAQ-listed shares traded are reported to NASDAQ systems. For more information about NASDAQ, visit the NASDAQ Web site at www.NASDAQtrader.com.