Reporting Requirements
In contrast to securities listed on U.S. stock exchanges, securities on the OTCQX, OTCQB and OTC Pink marketplaces may trade without being registered with the SEC.
To help investors analyze, value and trade securities, OTC Markets Group categorizes the 10,000 securities trading here into tiered marketplaces – OTCQX, OTCQB and OTC Pink - based on the quality and quantity of information companies provide.
The OTCQX best marketplace is for companies qualified by high financial standards, the quality of their disclosure and sponsorship by a third-party advisorThe OTCQB venture stage marketplace is designed for early and developing U.S. and international companies that are current in their reporting but may not yet qualify for OTCQXCompanies that do not either qualify for OTCQX or comply with OTCQB requirements are traded on OTC Pink, an open marketplace designed for broker-dealers to electronically trade securities without any company involvement.
The companies traded on the OTCQX, OTCQB and OTC Pink marketplaces follow one of the following reporting standards:
International Information Standard: Rule 12g3-2(b) under the Securities Exchange Act (“Rule 12g3-2(b)”) permits non-U.S. companies with securities listed primarily on a qualified non-U.S. exchange to make publicly available to U.S investors in English the same information that is made publicly available in their home countries as an alternative to SEC reportingU.S. Reporting Standard: Companies are in compliance with their SEC reporting requirements or are current in their periodic reporting requirements to a U.S. banking or insurance regulator.U.S. Banks Reporting Standard: Banks with SEC-registered securities must be current in required reporting. Banks without SEC-registered securities must follow the disclosure guidelines outlined in the OTCQX Rules for U.S. Banks. Banks are also required to release any news or information which might reasonably be expected to materially affect the market for its securities in a timely mannerAlternative Reporting Standard: When SEC registration is not required, companies must generally still make information publicly available pursuant to Federal securities laws, including Rule 10b-5 under the Exchange Act and pursuant Rule 144(c)(2) under the Securities Act. OTC Markets Group offers the Alternative Reporting Standard for companies who choose to make material information publicly available to investorsOTCQX U.S companies not reporting to the SEC can follow the Alternative Reporting Standard. These companies submit information pursuant to the OTCQX U.S. Disclosure Guidelinesand are subject to the eligibility requirements and terms of the OTCQX Rules for U.S. Companies. OTCQX companies provide current and potential investors with a set of "material" information to help investors make a sound investment decision. OTCQX company disclosure enables an investor to understand the company’s business operations and prospectsOTC Pink companies may publish disclosure in accordance with the OTC Pink Basic Disclosure Guidelines. These requirements are designed to give an investor the basic information a broker-dealer must maintain under Exchange Act Rule 15c2-11 in order to initiate a quote in a security on the OTCQX, OTCQB or OTC Pink marketplaces. To learn how to upgrade to Pink Current, click hereA Company's Obligations on the OTCQX, OTCQB and OTC Pink MarketplacesFinancial Reporting - Many companies are not subject to SEC registration requirements, and therefore, do not make regular filings of financial information and other corporate events with the SEC. Companies are not required to provide financial information to OTC Markets Group; however in order for investors to make informed trading decisions, many companies elect to provide disclosure. For a detailed explanation of SEC registration and reporting requirements and the exemptions available from those requirements, please see the SEC's Small Business Question and Answer PageCorporate Actions - SEC Rule 10b-17 requires all OTCQX, OTCQB and OTC Pink companies to provide timely notice to FINRA of certain corporate actions, including dividends, stock splits, reverse splits, name changes, mergers, acquisitions, dissolutions, bankruptcies or liquidations, at least 10 days prior to the record date. Companies who fail to report such corporate actions in the required time may be subject to fines up to $5,000. For more information, see FINRA's Notice to Member 10-38. For further details, contact FINRA’s Operations Department at 866-776-0800
