OTCQB

DEFINITION of 'OTCQB'

The venture stage marketplace for smaller or early-stage companies that report to a U.S. regulator such as the SEC or FDIC. The OTCQB is the middle tier of the three marketplaces for trading over-the-counter stocks provided and operated by the OTC Markets Group. The OTCQB has replaced the Financial Industry Regulatory Authority (FINRA)-operated OTC Bulletin Board (OTCBB) as the main market for trading OTC securities that report to a U.S. regulator. As it has no minimum financial standards, the OTCQB includes shell companies, penny stocks and small foreign issuers.
 

BREAKING DOWN 'OTCQB'

 
Most broker-dealers electronically quote prices for securities of SEC-reporting companies on the OTCQB marketplace through OTC Link, an inter-dealer quotation and trading system developed by OTC Markets Group. OTC Link is registered with the SEC as a broker-dealer and also as an alternative trading system (ATS). OTC Link enables broker-dealers not only to post and disseminate their quotes, but also negotiate trades through the system’s electronic messaging capability. This feature enabled it to effectively replace FINRA’s OTCBB, which was a quotation-only system.

All broker-dealers that trade OTCQB, OTCQX and OTC Pink securities have to be FINRA members and registered with the SEC; they are also subject to state securities regulations.
 
As with exchange-traded securities, investors trading OTC securities are protected from an unethical broker-dealer’s illegal practices by the same SEC / FINRA rules such as Best Execution, Limit Order Protection, Firm Quotes, and Short Position Disclosure.
 
 

RELATED TERMS
  1. OTC Markets Group Inc.

    The owner and operator of the leading U.S. inter-dealer electronic ...
  2. Over-The-Counter Market

    A decentralized market, without a central physical location, ...
  3. OTC Pink

    The lowest tier of the three marketplaces for trading over-the-counter ...
  4. Pink Sheets

    A daily publication compiled by the National Quotation Bureau ...
  5. Over-The-Counter - OTC

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

    A United States bulletin that provides updated bid and ask prices ...
Related Articles
  1. Investing

    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. Markets

    What's an Over-The-Counter Market?

    The over-the-counter market is a decentralized market in which unlisted securities trade.
  3. Markets

    When Is A Penny Stock Not A Penny Stock Anymore?

    Although investors may shy away from them, many don’t understand that there is actually more to these misunderstood securities than one might think.
  4. Investing

    Penny Stocks: 3 Tips to Trade Over-the-Counter Stocks

    Discover some valuable tips to make investing in over the counter penny stocks more likely to be a profitable investment endeavor.
  5. Markets

    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.
  6. Markets

    Getting To Know The Stock Exchanges

    Here are the answers to all the questions you have about stock exchanges but are too afraid to ask!
  7. Markets

    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.
  8. Trading

    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.
  9. Investing

    Why Do Penny Stocks Fail?

    Penny stocks are speculative and highly risky investments. Lack of government and stock exchange oversight and general information leaves penny stock investors open to sudden losses.
  10. Markets

    Steps to Starting Up an Independent Broker Dealer

    Launching your own broker-dealer is a lot of work, but the potential payoff is great, both personally and financially.
RELATED FAQS
  1. What are the SEC (Securities And Exchange Commission) rules about OTC (over-the-counter) ...

    Find out how the Securities and Exchange Commission and the Financial Industry Regulatory Authority regulate trades on the ... 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. 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 >>
  4. 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 >>
  5. 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 >>
  6. What are the steps to get a company listed on the OTCBB?

    The over-the-counter bulletin board (OTCBB) is a regulated quotation service for over-the-counter (OTC) securities. The securities ... Read Answer >>
Hot Definitions
  1. Glass-Steagall Act

    An act the U.S. Congress passed in 1933 as the Banking Act, which prohibited commercial banks from participating in the investment ...
  2. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  3. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  4. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  5. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  6. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
Trading Center