OTC Pink

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.
 

RELATED TERMS
  1. OTC Markets Group Inc.

    The owner and operator of the leading U.S. inter-dealer electronic ...
  2. Pink Sheets

    A daily publication compiled by the National Quotation Bureau ...
  3. Over-The-Counter Market

    A decentralized market, without a central physical location, ...
  4. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices ...
  5. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context ...
  6. OTCQB

    The venture stage marketplace for smaller or early-stage companies ...
Related Articles
  1. Investing Basics

    How To Play The OTC Pink Stocks

    The OTC Pink offers a variety of investment candidates including many good companies waiting to be discovered. Recently, the OTC Pink has worked hard to improve the service by tiering companies ...
  2. Investing

    The Over-The-Counter Market: An Introduction To Pink Sheets

    Being early to a party may not be hip, but being early on a rising stock certainly is.
  3. Investing Basics

    Use Caution Trading Pink Sheet Stocks

    Pink Sheets stocks offer exciting opportunities to increase portfolio returns by large magnitudes in a short time. However, these opportunities come with significant risks. Investors need to ...
  4. Investing Basics

    What are the Pink Sheets?

    Pink Sheets is a listing of over-the-counter stocks that are not listed on any established exchange such as the New York Stock Exchange or the NASDAQ.
  5. Trading Systems & Software

    What's an Over-The-Counter Market?

    The over-the-counter market is a decentralized market in which unlisted securities trade.
  6. Investing

    Trading Over the Counter

    OTC trades tend to be for smaller company stocks and debt securities. Debt securities such as bonds are generally traded by investment banks making markets for specific issues.
  7. Trading Strategies

    How To Buy Penny Stocks (While Avoiding Scammers)

    Penny stocks are risky business. If want to trade in them, here's how to preserve your trading capital and even score the occasional winner.
  8. Investing Basics

    Why Do Penny Stocks Fail?

    Penny stocks are like a house of cards: risky investments with fragile frameworks that can, and frequently do, collapse.
  9. Investing Basics

    How To Invest In Penny Stocks

    Penny stocks are highly speculative and very risky for many reasons, including their lack of liquidity and small market capitalization.
  10. Investing Basics

    Why You Should Understand The Stock Market

    Even if you don't invest a cent in stocks, you should still understand how the stock market works. Find out why.
RELATED FAQS
  1. What is a "pink sheet" in the context of an OTC (over-the-counter) transaction?

    Read about pink sheets, the electronically driven over-the-counter market in which broker-dealers connect to trade the stock ... Read Answer >>
  2. Where do I go to make an OTC (over-the-counter) transaction?

    Learn about the over-the-counter, or OTC, market and how to purchase its stocks. These stocks are often risky, but some offer ... Read Answer >>
  3. What are the risks involved in OTC (over-the-counter) trading?

    Learn about the significant disadvantages and risks that are involved for investors seeking to trade in over-the-counter ... Read Answer >>
  4. How do I buy an over-the-counter stock?

    The process of purchasing over-the-counter (OTC) stocks is different than purchasing stock from companies on the NYSE and ... Read Answer >>
  5. Can investors short sell pink sheet or over-the-counter stocks?

    Short selling is an effective trading strategy that can be employed to hedge the risk of a loss on an off-setting position ... Read Answer >>
  6. Why are OTC (over-the-counter) transactions controversial?

    Learn more about over-the-counter transactions, and why OTC traders are considered riskier than traders working with larger ... Read Answer >>
Hot Definitions
  1. Labor Market

    The labor market refers to the supply and demand for labor, in which employees provide the supply and employers the demand. ...
  2. Demand Curve

    The demand curve is a graphical representation of the relationship between the price of a good or service and the quantity ...
  3. Goldilocks Economy

    An economy that is not so hot that it causes inflation, and not so cold that it causes a recession. This term is used to ...
  4. White Squire

    Very similar to a "white knight", but instead of purchasing a majority interest, the squire purchases a lesser interest in ...
  5. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  6. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
Trading Center