What is an Over-the-Counter Market?
The over-the-counter (OTC) volume information for securities traded over the counter (that is, securities not listed on the Nasdaq, , or other exchanges).
The OTC began operating in June 1990, after the Reform Act of 1990 required the SEC to establish an electronic quotation system for those stocks.
How Does an Over-the-Counter Market Work?
Nasdaq disseminates OTC information to data vendor terminals and websites to subscribing customers. Among other things, the information contains high, low and closing prices and volumes; inside for certain securities; and telephone numbers for makers of particular securities.
In order for an issuer to post a for its OTC security, it must first find a to sponsor the . quoted by the OTCBB have the ticker suffix "OB." Issuers do not pay a fee to have their securities quoted on the OTCBB because it is not an actual exchange.
More than 200 market makers participate in the OTC market, and thousands of securities are accessed there. The issuers of the securities quoted in the OTCBB must make periodic filing requirements to the SEC and other regulators that somewhat vary from traditionally required filings.
Why Does an Over-the-Counter Market Matter?
Small companies that may not meet the listing requirements for their securities to be listed on national exchanges might turn to the OTC bid/ask spread is often larger for OTC securities.as an alternative. However, because these companies do not meet listing requirements, they are often considered riskier and are less actively traded than listed on national exchanges. Thus, the