Off Board

Written By
Paul Tracy
Updated November 11, 2020

What is Off Board?

The New York Stock Exchange is commonly referred to as the Big Board. Accordingly, "off board" refers to trades of stocks that occur outside major exchanges.

How Does Off Board Work?

Off-board trades usually occur between two institutions or between an institution and a customer. For example, let's assume that Company XYZ and Company ABC are pension funds in California and Oregon, respectively. Company XYZ wants to sell 2,000,000 shares of McDonald’s (MCD) to Company ABC. However, the trade is so large that investors might regard the transaction as a sell signal on MCD, which could tank the stock and make further sales more difficult for the seller. Therefore, the two companies decide to do the trade off board.

Off-board trading usually occurs on the OTC market or directly between buyers and sellers. Off-board trades can also occur on a smaller regional exchange. "Dark pools" are increasingly used for off-board trading as well.

Off board can also refer to trades of 19c3 securities or stocks that were listed on an exchange after 1979. SEC Rule 19c3 allows stocks listed on any equity exchange after April 26, 1979, to trade off board.

Why Does Off Board Matter?

Off-board trades provide anonymity as well as a way to avoid destabilizing the markets if a trade is particularly large. However, off-board trading is also controversial because it prevents all investors and market participants from knowing the true prices at which specific securities are valued in all arm's-length transactions.
Given that off-board trading constitutes 20% of all market volume, according to some sources, the controversy is bound to continue or increase with the popularity of off-board trading.

Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Off Board .
Be the first to ask a question

If you have a question about Off Board , then please ask Paul.

Ask a question

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Off Board , then please ask Paul.

Ask a question Read more from Paul

Read this next

Paul Tracy - profile
Ask an Expert about Off Board

By submitting this form you agree with our Privacy Policy

Don't Know a Financial Term?
Search our library of 4,000+ terms