The OTCBB operates as a dealer system. As a result, all securities being quoted on the OTCBB must be sponsored by a participating Market Maker that registers the security by completing a Form 211 unless an exemption applies. The Market Maker must submit a Form 211 to the NASD OTC Compliance Unit along with two copies of the required issuer information no less than three business days prior to publication of a quote on the OTC Bulletin Board. Once cleared, Nasdaq Market Data Integrity will notify the Market Maker that it has been registered in the security and may enter a quote.
Ineligible Securities Every OTC security not currently quoted on the OTC Bulletin Board is considered "ineligible" until a Market Maker submits a Form 211 or a 15c2-11 Exemption Form. After clearance, the security is granted "eligible" status.
Eligible Securities If a security has eligible status, it means one or more Market Makers has received clearance to quote the issue on the OTC Bulletin Board within the last 30 days. Any other participating Market Maker that wishes to quote the issue must also submit a completed Form 211. During the "eligible" period, a frequency-of-quotation test is administered. The test is described below. Until the test is satisfied, all Market Makers must continue to submit a completed Form 211.
Active Securities An OTCBB-eligible security that meets the frequency-of-quotation requirement for the so-called "piggyback" exception is identified in the service as "active." The frequency-of-quotation test or "piggyback" exception is based on whether a broker/dealer has itself published quotations in the security in the applicable interdealer quotation system on at least 12 business days during the preceding 30 calendar days, with not more than four consecutive business days without quotations. Once this criteria has been satisfied, authorized participants may register on-line in a security. As long as the security remains in an "active" state, any participant may quote the security without a Form 211 submission.
Other Exemptions to 15c2-11
Before an issue can be quoted on the OTC Bulletin Board® (OTCBB), a Market Maker must first determine if it is already listed on a U.S. national exchange or market. If the issue is listed on a national exchange or market, it may not be quoted on the OTCBB. Market Makers should also check to see if the issue is on the National Quotation Bureau's Pink Sheets. If it is on the Pink Sheets, then, to quote on the OTCBB, the Market Maker quoting the issue may file an exemption to the 15c2-11 rather than a full Form 211; non-Market Makers must file a Form 211.
If the issue is listed on a regional exchange: If the issue is listed on a regional exchange, is current in its SEC filings, and does not meet the minimum criteria for inclusion in the Consolidated Quotation and Transaction Reporting Systems, a Rule 15c2-11 Regional Security Exemption Form should be filed for quotation on the OTCBB. If the issue does not meet the exemption criteria, a full Form 211 must be filed for quotation on the OTCBB.
If the issue has been delisted from Nasdaq: If the issue has been delisted from The Nasdaq Stock MarketSM because it has not maintained Nasdaq's listing requirements and the security meets the following criteria, then the issue will be available for immediate quotation on the OTCBB only for those Market Makers quoting in the security during the 30-day period preceding its removal.
The security has been quoted continuously on Nasdaq® during the 30 calendar days preceding its delisting, exclusive of any trading halt not exceeding one day to permit the dissemination of material news concerning the security's issuer. The issuer must not be the subject of bankruptcy proceedings. The issuer must be current in its filings. If the issue does not meet all of the above criteria upon delisting, a Form 211 must be filed for quotation on the OTCBB.
The Form 211 must be completed and mailed with two copies of the required issuer information to NASD Regulation, Inc. at the following address:
NASD Regulation, Inc. OTC Compliance Unit 9509 Key West Avenue Rockville, MD 20850 phone: (240) 386-5100 fax: (240) 386-5139
The OTC Compliance Unit will review the information and contact applicants if additional information is necessary. A notification will be sent out when the application has been cleared.
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