DEFINITION of 'OTC Pink'
The lowest tier of the three marketplaces for trading over-the-counter stocks provided and operated by the OTC Markets Group. The OTC Pink Marketplace offers trading in a wide range of equities through any broker, and includes companies in default or financial distress. Since it has no disclosure requirements, OTC Pink companies are categorized on the basis of information provided by them. OTC Markets somewhat euphemistically bills OTC Pink as “The Open Marketplace with Variable Reporting Companies.”
BREAKING DOWN 'OTC Pink'
Due to the variable nature of reporting by OTC Pink companies, they are classified based on the quality and quantity of information provided to investors as companies with Current Information, Limited Information or No Information.
“Current Information” companies are those that follow the International Reporting Standard or Alternative Reporting Standard by making filings publicly available through the OTC Disclosure & News Service. “Limited Information” companies include troubled firms in financial distress, bankruptcy, or those with accounting issues, as well as companies that are unwilling to meet the OTC Pink Basic Disclosure Guidelines. “No Information” companies are those that do not provide disclosure.