Who Can Quote in the Pink Sheets
Quotations are only accepted from U.S. Securities and Exchange Commission (SEC) registered broker/dealers. Market makers are subject to applicable Federal and State securities laws and National Association of Securities Dealers (FINRA) or other SRO membership rules. Market makers must be subscribers and have quotation privileges to quote securities in the Pink Sheets or the Yellow Sheets. Call 800.LIST.OTC to sign up now.
How to Initiate a Quote: Rule 15c2-11
FINRA rules require broker/dealers to submit information to the FINRA gathered pursuant to Securities and Exchange Act of 1934 (Exchange Act) Rule 15c2-11 before initiating or resuming a quotation of an OTC equity in the Pink Sheets. Two copies of the required information is submitted with a completed Form 211 to FINRA Regulation, Inc. at the following address:
FINRA Regulation, Inc.
OTC Compliance Unit
9509 Key West Ave.
Rockville, MD 20850
(240) 386-5100
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.
* Form 211 (pdf)
Unless an exception to Rule 15c2-11 is available (see below), the rule can be satisfied in one of only five ways:
1. The broker/dealer must have in its possession a prospectus specified by Section 10(a) of the Securities Act of 1933 (Securities Act) that has been filed with the Commission and which has been in effect less than 90 calendar days; or
2. The broker/dealer must have a copy of the offering circular provided for under Regulation A of the Securities Act and the effective date must be within the preceding 40 days; or
3. The issuer must be required to make reports under Exchange Act Sections 12(g)(2)(B) or (G), or pursuant to Exchange Act Sections 13 or 15 (d), must be current in its filings with the SEC, and the broker/dealer must have in its possession the issuer's latest form 10-K and all subsequent Form 10-Qs and Form 8-Ks; or
4. The issuer must be exempt from Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act) pursuant to Rule 12g3-2(b) and the broker/dealer must have in its possession all the information furnished to the SEC during the issuer's last fiscal year; or
5. The broker/dealer must have in its possession 16 items of information about the issuer, including financial information which shall be reasonably current in relation to the day the quotation is submitted.
211 Exceptions
Before an equity issue can be quoted, a market maker should first determine if it is eligible for one of the following exceptions under SEC Rule 15c2-11:
* The security is currently listed on a US exchange or Nasdaq.
* The brokerage firm wishes to submit an unsolicited quote. An unsolicited quote represents a customer order and not a market maker's own position and must be removed from the system once the customer order is executed. See Unsolicited Quotes below for more information and the application form for entering unsolicited quotes in Pink Sheets' Electronic Quotation Service.
* The security is piggyback eligible. A security becomes piggyback eligible when it has been quoted on the Pink Sheets by at least one market maker for a minimum of 30 days. Piggy back eligible securities are identified on pinksheets.com with the text "Piggyback Qualified" and on the OTC Dealer as "PBQ".
* The "Globenet Exemption." Under this exemption, a market maker can initiate a quotation on the Pink Sheets for an OTCBB-quoted security without submitting a Form 211 to the NASD, subject to the following conditions:
1. Each broker or dealer relying upon this exemption must have in its records information specified in paragraphs (a)(5)(i), (a)(5)(viii), (a)(5)(xiv), (a)(5)(xv), and (a)(5)(xvi) of Rule 15c2-11;
2. Two-way bid and ask priced quotations that do not reflect customer indications of interest must have been published during the previous 30 calendar days, with no more than four business days in succession without such quotations, in an interdealer quotation system that displays unsolicited customer indications of interest;
3. The issuer of the security has not been delinquent in any of its reporting obligations under the Exchange Act or rules thereunder for more than 30 days, if subject to Section 10(a) or 15(d) of the Exchange Act;
4. Since the issuer of the security filed its most recent annual report, the issuer has not filed a report with respect to any event included in Item 1 (Changes in Control of Registrant), Item 2 (Acquisition or Disposition of Assets), Item 3 (Bankruptcy or Receivership) Item 4 (Changes in Registrant's Certifying Accountant), or Item 6 (Resignation of Registrant's Directors) of Form 8-K under the Exchange Act;
5. The issuer of the security is not exempt from the registration requirements under Section 12(g) of the Exchange Act pursuant to Rule 12g3-2(b); and
6. The issuer of the security is not the subject of bankruptcy proceedings.
Quotation of Delisted Nasdaq Securities
Because the Pink Sheets is a quotation medium for subscribing members and not an issuer listing service, a delisted issuer cannot "list" themselves in the Pink Sheets.
Delisted from Nasdaq
If a security has been delisted from The Nasdaq Stock Market because the Issuer has not maintained Nasdaq's listing requirements and the security meets the following criteria, then the security will be available for immediate quotation in the Pink Sheets 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 with the SEC.
Upon delisting of a security meeting the above criteria, market makers that have quoted the security in Nasdaq during the 30-day period preceding its removal may contact Pink Sheets to enter a quote anytime prior to market close on the day of delisting, without submitting a Form 211. Generally, the security will become ?piggyback qualified? in Pink Sheets 30 days after delisting, at which time other market makers may enter a quote in Pink Sheets without submitting a From 211 to NASD. A delisted Nasdaq issuer that wishes to be quoted in the Pink Sheets should contact their market makers to request that they register to quote the security in Pink Sheets.
If the issuer does not meet all of the above criteria upon delisting, if it voluntarily delists from Nasdaq, or if no market maker entered a quote in Pink Sheets on the day of delisting then the usual Form 211 filing and review process will apply. However, many Nasdaq-listed securities are already quoted in the Pink Sheets on an unpriced basis. This provides the market maker with an exemption to filing a Form 211 in the event the security is delisted from Nasdaq. In this case, any market maker that had been quoting the security in the Pink Sheets for the 30 days prior to delisting could continue to make a market in the Pink Sheets upon delisting. The security generally becomes "piggy-back qualified" the same day it is delisted and any other market maker can then enter its quotes in the Pink Sheets without first submitting a Form 211 to the NASD. To find out if a Nasdaq listed security is being quoted on the Pink Sheets concurrently, please call Pink Sheets' Issuer Services Department at 212-896-4420 or email us at issuerservices@pinksheets.com.
Delisted from an Exchange
If a security is delisted from The New York Stock Exchange or from the American Stock Exchange, then the usual Form 211 filing and review process will apply. However, some exchange-listed securities are already quoted in the Pink Sheets on an unpriced basis. This provides the market maker with an exemption to filing a Form 211 in the event the security is delisted from the Exchange. In this case, any market maker that had been quoting the security in the Pink Sheets for the 30 days prior to delisting could continue to make a market in the Pink Sheets upon delisting. The security generally becomes "piggy-back qualified" the same day it is delisted and any other market maker can then enter its quotes in the Pink Sheets without first submitting a Form 211 to the NASD. To find out if an Exchange-listed security is being quoted on the Pink Sheets concurrently, please call Pink Sheets' Issuer Services Department at 212-896-4420 or email us at issuerservices@pinksheets.com.
Unsolicited Quotes
SEC Rule 15c2-11 provides an exemption to filing a Form 211 with the NASD for brokers that wish to publish an unsolicited quote. An unsolicited quote represents a customer order and not a market maker's own position and must be removed from the system once the customer order is executed. Compliance with this rule is monitored by the NASD.
Federal securities laws require an issuer making a public offering of securities to file a registration statement with the Securities and Exchange Commission containing certain disclosures regarding the issuer and its securities. Pink Sheets has become increasingly concerned that the unsolicited quote exception in Exchange Act Rule 15c2-11 is being abused by unscrupulous individuals to engage in questionable and possibly fraudulent activities in violation of the federal securities laws. Pink Sheets, as a matter of policy, does not believe that the Unsolicited Quote Exemption should be used to circumvent the NASD's 211 process. As a result, effective February 6, 2006, Pink Sheets is limiting the publication of unsolicited quotes to securities of seasoned issuers only. A seaoned security is generally defined as a security for which there has previously been a public market or a security of an issuer that has other seasoned securities.
Pink Sheets generally will publish unsolicited quotations in securities that meet one of the following five conditions:
1. The Issuer of the securities is subject to Section 13 or 15(d) of the Exchange Act, is current in its filing obligations and has other seasoned securities currently trading on the NYSE, AMEX, NASDAQ, OTCBB or the Pink Sheets.
2. The securities were recently delisted from NYSE, AMEX, NASDAQ or the OTCBB;
3. The Issuer is a bank, savings and loan, or insurance company;
4. The securities were issued as part of a bankruptcy plan of reorganization; or
5. The security being quoted is a foreign ordinary, which is listed on a foreign exchange, or an ADR representing such ordinaries
In order to publish an unsolicited quote for a security that meets one of the above conditions and is not already quoted on Pink Sheets, a broker should submit this form to Pink Sheets:
* Broker/Dealer Unsolicited Quote Entry (pdf)
Issuers of previously unseasoned securities that originally entered the Pink Sheets prior to February 6, 2006 using the unsolicited quote exemption and continue to be quoted only on an unsolicited basis are required by Pink Sheets to continue to make periodic disclosure using the Pink Sheets News Service. If the Issuer ceases to provide current information, Pink Sheets may cease to allow broker/dealers to publish quotes in its securities.
For additional information on the Pink Sheets' policy regarding the publication of unsolicited quotes, and for information on Pink Sheets' disclosure requirements for securities quoted on an unsolicited basis prior to February 6, 2006, click here.
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