DEFINITION of 'Interdealer Quotation System'

The interdealer (or inter-dealer) quotation system (IQS) is an exchange system comprised of the Nasdaq (National Association of Securities Dealers Automatic Quotation), Nasdaq small-cap market and the Over-the-Counter Bulletin Board (OTCBB) exchange platforms. The Interdealer Quotation System gives investors access to literally thousands of publicly traded companies, from mega-cap names such as Microsoft right down to the smallest of the micro cap stocks.

Interdealer quotation systems allow investors access, crucially, to smaller issues such as those which trade OTC, but in a standardized fashion consistent with FINRA regulations, and so mostly deal with OTC quotes.

BREAKING DOWN 'Interdealer Quotation System'

OTC Bulletin Board

The OTC Bulletin Board (OTCBB) is an electronic interdealer quotation system that displays quotes, last-sale prices, and volume information for many OTC equity securities that are not listed on a national securities exchange such as the NYSE. Securities quoted on the OTCBB include domestic, foreign and American depository receipts (ADRs). OTCBB may also be referred to as the "pink sheets."

Only broker-dealers qualified with FINRA as market makers can apply to quote securities on the OTCBB. Under the OTCBB's eligibility rule, companies that want to have their securities quoted on the OTCBB must seek the sponsorship of a market maker as well as file current financial reports with the SEC or with their banking or insurance regulator.

OTC Link LLC

OTC Link is another electronic interdealer quotation system that displays quotes, last-sale prices, and volume information in exchange-listed securities, OTC equity securities, foreign equity securities and certain corporate debt securities. In addition to publishing quotes, OTC Link provides, among other things, subscribers the ability to send and receive trade messages, allowing them to communicate for the purpose of negotiating trades.

All subscribers to OTC Link are broker-dealers that are members of FINRA. Subscribers are permitted to quote any OTC equity security eligible for quoting under the Exchange Act Rule 15c2-11 or the applicable exemptions the rule. OTC Link does not require companies whose securities are quoted on its system to meet any eligibility requirements. With the exception of some foreign issuers, the companies quoted on OTC Link tend to be closely held, very small and thinly traded. Most issuers do not meet the minimum listing requirements for trading on a national stock exchange. Many of these companies furthermore do not file periodic reports or audited financial statements with the SEC, making it difficult for the public to find current, reliable information about those companies. OTC Link is registered with the SEC as a broker-dealer and as an alternative trading system (ATS), and is a member of FINRA.

Global OTC

Global OTC is an electronic interdealer quotation system that displays quotes, last-sale prices, and volume information in global OTC equity securities, and is operated by Archipelago Trading Services, Inc., a broker-dealer registered with the SEC.

RELATED TERMS
  1. OTC Pink

    OTC Pink is the lowest tier of the three marketplaces for trading ...
  2. Over-The-Counter Market

    An Over-The-Counter (OTC) Market is a decentralized market where ...
  3. European Currency Quotation

    A European currency quotation is an indirect quotation in the ...
  4. American Currency Quotation

    An American currency quotation, is how much U.S. currency you ...
  5. Inter-Dealer Broker

    An Inter-dealer broker is a financial intermediary aiding with ...
  6. Unlisted Security

    An unlisted security is a financial instrument that is not traded ...
Related Articles
  1. Trading

    OTCBB and OTC Markets Group

    The majority of larger companies that trade publicly choose to list their stocks on one of the major exchanges - the NYSE or Nasdaq. However, many companies are unable to meet the financial or ...
  2. Investing

    How to Play Stocks in the Pink Market

    Stocks trading on the OTC Pink Open Market include many good companies waiting to be discovered. Find out how the OTC tiered companies into three markets.
  3. Investing

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks, bonds and other securities are traded.
  4. Investing

    How To Identify A Micro-Cap Scam

    Discover how to distinguish a real investment opportunity from a fraudulent one.
  5. Investing

    Top Russian Stocks For American Investors

    American investors looking to diversify their portfolio to include Russian stocks can do so easily by purchasing shares of American Depository Receipts (ADRs).
  6. Investing

    The Lowdown On Penny Stocks

    Think penny stocks will make you rich? If you don't understand the risks, you could end up penniless. Learn the potential traps you may fall into in penny stock investing.
  7. Trading

    The Currency Market Information Edge

    Unique features of the forex market may allow larger players to get a jump on smaller ones.
  8. Investing

    Understanding Penny Stocks' Risks and Rewards

    Penny stocks can soar in a short period, but dabbling in them is a dangerous game. Here is a breakdown of the risks and rewards of penny stocks.
  9. Trading

    Electronic Trading Tutorial

    Learn about the systems that run the market.
RELATED FAQS
  1. How Does a Company Get Listed on the OTCBB?

    Learn about the stipulations for companies quoted in the over-the-counter bulletin board (OTCBB) service as over-the-counter ... Read Answer >>
  2. How do I buy an over-the-counter stock?

    Buy and sell orders of over-the-counter (OTC) securities take place through market makers who carry an inventory of securities ... Read Answer >>
  3. What are the risks involved in OTC (over-the-counter) trading?

    Despite the inherent risks, the opportunity to turn a small investment into a potential fortune continues to attract traders ... Read Answer >>
Trading Center