OTC Markets Group facts for kids
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Formerly
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National Quotation Bureau (1913-2000) Pink Sheets LLC (2000-2008) Pink OTC Markets (2008-2010) |
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| Public | |
| Traded as | OTCQX: OTCM |
| Industry | Financial services |
| Founded | 1913 (as National Quotation Bureau) |
| Headquarters |
300 Vesey Street, New York City, New York
,
U.S.
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Key people
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R. Cromwell Coulson (president, CEO and director) |
| Revenue |  US$ 105.1 million (2022) |
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Operating income
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US$ 36.8 million (2022) |
| US$ 30.8 million (2022) |
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| Total assets | US$ 89.6 million (2022) |
| Total equity | US$ 29.8 million (2022) |
| Divisions | OTC Link ATS, Market Data Licensing, Corporate Services |
OTC Markets Group, Inc. is a company in New York City, USA. It helps people buy and sell stocks that are not listed on big stock exchanges like the New York Stock Exchange. These stocks are called over-the-counter (OTC) securities.
The company provides information about nearly 12,400 different OTC stocks. This helps investors understand their value and how easily they can be traded. OTC Markets Group organizes these stocks into three main markets: OTCQX, OTCQB, and Pink. This helps investors know the risks and opportunities.
Contents
History of OTC Markets Group
The company started in 1913 as the National Quotation Bureau (NQB). For many years, the NQB published stock and bond prices on paper. Stock prices were printed on pink paper, and bond prices on yellow paper. This is why they were called "Pink Sheets" and "Yellow Sheets."
In 1999, the NQB began offering an electronic service for real-time stock prices. The company changed its name to Pink Sheets LLC in 2000. Later, in 2008, it became Pink OTC Markets. Finally, in 2010, the company got its current name, OTC Markets Group.
Today, many broker-dealers (companies that buy and sell stocks for others) use the OTC Markets platform. Companies do not always need to file reports with the U.S. government (SEC) to be listed here. Many foreign companies and small U.S. companies trade on this platform.
Some foreign companies follow the rules of their home country's stock exchanges. They make their financial information available in English. Many U.S. companies also share their financial reports through OTC Markets Group. However, some companies on the Pink market do not share regular financial reports. This can make it hard for investors to find reliable information. Because of this, the SEC warns that some lower-tier OTC stocks can be very risky.
How OTC Markets Work
OTC Markets Group sorts stocks into three different markets. This shows how much information the companies share. The names of these markets do not mean a company is good or bad. They only show how much and how quickly a company shares its information.
The OTCQX and OTCQB markets are seen as "Established Public Markets." This means they are recognized by the SEC for certain purposes. OTC Markets Group also has an electronic trading system called OTC Link ATS. This system helps brokers trade stocks easily.
OTCQX Market
The OTCQX market is for larger, more established companies. This includes big international companies and growing U.S. companies. To be on OTCQX, companies must be reviewed by OTC Markets Group.
They do not have to report to the SEC, but they must share their financial information with OTC Markets Group. U.S. companies must be active businesses and not in bankruptcy. Foreign companies must meet the rules of their home country's stock exchanges. These companies also need a sponsor, like an investment bank or law firm.
As of October 18, 2023, there were 658 stocks trading on the OTCQX market. This included 478 international companies and 180 U.S. companies.
OTCQB Market
The OTCQB market has a rule that a stock's price must be at least one cent ($0.01). This rule helps to avoid companies that might be involved in stock fraud. Each company on OTCQB must confirm its information every year. This includes details about their reports, management, and major owners.
This helps investors feel more confident because they have more information. There is an annual fee of $12,000 for companies on the OTCQB market. There is also a one-time application fee of $2,500.
As of October 18, 2023, there were 1,216 stocks trading on the OTCQB market.
OTCQX and OTCQB Blue Sky Status
Blue sky laws are state rules that protect investors from fraud. They often require companies selling new stocks to register and share financial details. This helps investors make smart choices.
As of November 2018, the OTCQX Market had "Blue Sky" status in 33 states. The OTCQB Market had this status in 30 states. This means that in these states, brokers can recommend these stocks to their clients, similar to stocks on national exchanges.
Pink Market
The Pink market is an open market with fewer rules about financial reporting. Companies in this group do not have to register with the SEC. These companies are sorted by how much and how often they share information.
Pink Current
Companies that submit regular quarterly and annual reports are in the Pink Current category. These companies must post quarterly reports every three months. They also need annual reports for at least the past two years. This category can include new companies or those with little business activity.
As of October 18, 2023, there were 6,705 stocks in the Pink Current category.
Pink Limited
Companies that have shared information within the last six months are in the Pink Limited category. This includes companies that might have financial problems or are in bankruptcy. They share information less often than Pink Current companies.
As of October 18, 2023, there were 3,684 stocks in the Pink Limited category.
Expert Market
This market is for companies that do not share their information with the public. The information they do share is often older than six months. This group includes companies that have stopped operating or those with unclear management.
Stocks in this market are considered very risky because there is little information. Prices for these stocks are hidden from the public. This market used to be called the Pink No Information tier.
As of October 18, 2023, there were 3,342 stocks in the Expert Market.
Caveat Emptor
"Caveat Emptor" means "buyer beware" in Latin. This label is given to companies that might have problems. This could be due to spam campaigns, stock promotions, or investigations into fraud. If a stock is labeled "Caveat Emptor" and is not in the Current Information category, its prices are blocked from public view on otcmarkets.com.
Risks of OTC Stocks
Many stocks traded OTC are called microcap stocks or penny stocks. These are often very small companies. They are known for being risky and can sometimes be part of scams.
After a law called the Sarbanes-Oxley Act was passed in 2002, some companies chose to trade OTC. They did this to save money and avoid some rules. However, OTC companies have also been encouraged to share more information.
Other OTC Trading Places
OTC Bulletin Board (OTCBB)
The OTC Bulletin Board (OTCBB) was another place where OTC stocks were listed. Companies on the OTCBB had to file regular reports with a U.S. government agency. The OTCBB became less important over time. Most OTCBB companies now trade on OTC Markets' OTC Link ATS. This is because OTC Link ATS is a fully electronic system. The OTCBB officially closed on November 8, 2021.
Grey Market
Stocks that are not listed on any stock exchange or formally on OTC Markets or OTCBB are in the grey market. Trades for these stocks happen privately. They are not listed or priced in a central place. These trades are reported to a special organization. This organization then shares the data with market information companies. The grey market is also known as OTOTC or Other OTC.
As of October 18, 2023, there were 1,426 stocks in the grey market.
