These Rules shall be known as the "OTC Bulletin Board Rules" and govern the operation and use of the OTC Bulletin Board service (OTCBB or "Service") by broker/dealers admitted to membership in the Association and their associated persons. Unless otherwise indicated, the requirements of the OTC Bulletin Board Rules are in addition to the requirements contained in the other rules of the Association, By-Laws, and Schedules to the By-Laws.
The OTCBB provides an electronic quotation medium for subscribing members to reflect market making interest in OTCBB-eligible securities. Subscribing Market Makers can utilize the Service to enter, update, and display their proprietary quotations in individual securities on a real-time basis. Such quotation entries may consist of a priced bid and/or offer; an unpriced indication of interest (including "bid wanted" or "offer wanted" indications); or a bid/offer accompanied by a modifier to reflect unsolicited customer interest. A subscribing Market Maker can also access the proprietary quotations that other firms have entered into the Service along with highest bid and lowest offer (i.e., an inside bid-ask calculation) in any OTCBB-eligible security with at least two Market Makers displaying two-sided markets.
6530. OTCBB-Eligible Securities
A member shall be permitted to quote the following categories of securities in the Service:
any domestic equity security that satisfies the requirements of subparagraph (1) and either subparagraph (2) or (3) or (4) below; the security is not listed on The Nasdaq Stock MarketSM ("Nasdaq") or a registered national securities exchange in the U.S., except that an equity security shall be considered eligible if it:
is listed on one or more regional stock exchanges, and does not qualify for dissemination of transaction reports via the facilities of the Consolidated Tape; and
the issuer of the security is required to file reports pursuant to Section 13 or 15(d) of the Act or the security is described in Section 12(g)(2)(B) of the Act, and, subject to a thirty calendar day grace period, the issuer is current in its reporting obligations, or
the security is described in Section 12(g)(2)(G) of the Act, and, subject to a sixty calendar day grace period, the issuer is current in its reporting obligations, or
the issuer of the security is a bank or savings association that is not required to file reports with the Commission pursuant to Section 13 or 15(d) of the Act and, subject to a sixty calendar day grace period, the issuer of the security is current with all required filings with its appropriate Federal banking agency or State bank supervisor (as defined in 12 U.S.C. 1813).
any foreign equity security or American Depositary Receipt (ADR) that meets all of the following criteria:
the security is registered with the Commission pursuant to Section 12 of the Act and the issuer of the security is current in its reporting obligations; or the security satisfies the requirements of paragraph (a)(2) or (3) or (4) above; and
the security is not listed on Nasdaq or a registered national securities exchange in the U.S., except that a foreign equity security or ADR shall meet this subparagraph (2) if it is :
listed on one or more regional stock exchanges, and
does not qualify for dissemination of transaction reports via the facilities of the Consolidated Tape.
any equity security that meets the following criteria:
the security is undergoing delisting from either the New York Stock Exchange, Inc. (NYSE) or the American Stock Exchange, Inc. (AMEX) for non-compliance with maintenance-of-listing standards; and
the security is subject to a trading suspension imposed by the NYSE or AMEX preceding the actual delisting; and
the security satisfies the requirements of paragraph (a)(2) or (3) or (4) above.
any Direct Participation Program as defined in Rule 6910 that is not listed on Nasdaq or a registered national securities exchange in the U.S. and that satisfies the requirements of paragraphs (a)(2) and (3) and(4) above.
Paragraphs (a)(2) or (3) or (4) above will not apply with respect to any domestic equity security quoted in the Service on the effective date of this rule change until six months after that date.
6540. Requirements Applicable to Market Makers
Market Maker participation in the OTCBB is voluntary and open to any Association member firm that satisfies the financial/operational requirements applicable to member firms engaged in over-the-counter market making; subscribes to Level III Nasdaq Workstation II service; and demonstrates compliance with (or qualifies for an exception from) SEC Rule 15c2-11 at the time of initiating (or resuming) the quotation of any OTCBB-eligible security in the Service. Rule 6740 sets forth the procedure for demonstrating compliance with SEC Rule 15c2-11.
An alternative trading system (ATS), as defined in Regulation ATS, Rule 300(a), or electronic communications network (ECN) as defined in SEC Rule 11Ac1-1(a)(8), shall be eligible to participate in the Service, provided however, that such ATS or ECN is an NASD member and otherwise meets the requirements for participation set forth in the OTC Bulletin Board Rules. Where used in the OTC Bulletin Board Rules, the term "market maker" shall be construed to include a participating ATS or ECN.
A participating ATS or ECN shall reflect non-subscriber access or post-transaction fees in the ATS's or ECN's posted quote in the OTC Bulletin Board montage.
OTCBB-eligible securities that meet the frequency-of-quotation requirement for the so called "piggyback" exception in SEC Rule 15c2-11(f)(3)(i) are identified in the Service as "active" securities. A member can commence market making in any active security by registering as a Market Maker through a Nasdaq Workstation at the firm. In all other instances, a member must follow the procedure contained in this Rule to become qualified as a Market Maker in a particular OTCBB-eligible security.*
Permissible Quotation Entries
A member firm that has qualified as a Market Maker in a particular OTCBB-eligible security may enter into the Service a priced bid and/or offer, an unpriced indication of interest (including "bid wanted" and "offer wanted" indications) or a bid or offer accompanied by a modifier to reflect unsolicited customer interest. Every quotation entry must include the appropriate telephone number for the firm's trading desk.
A priced bid and/or offer entered into the Service for any security other than a Direct Participation Program must be firm up to the minimum quotation size specified in Rule 6750. This firmness requirement applies only during normal business hours, i.e., 9:30 a.m. to 4:00 p.m. Eastern Time.
A priced bid and/or offer entered into the Service for a Direct Participation Program security shall be non-firm.** Moreover, a Market Maker is only permitted to update quotation entries in such securities twice daily, i.e., once between 8:30 a.m. and 9:30 a.m. Eastern Time, and once between noon and 12:30 p.m. Eastern Time.***
Any member that intends to be a distribution participant in a distribution of securities subject to SEC Rule 101, or is an affiliated purchaser in such distribution, and is entering quotations in an OTCBB-eligible security that is the subject security or reference security of such distribution shall, unless another member has assumed responsibility for compliance with this paragraph:
(i) provide written notice to Nasdaq Market Operations prior to the pricing of the distribution that includes the intended date and time of the pricing of the offering; (ii) withdraw all quotations in the OTCBB-eligible security to comply with the applicable restricted period under SEC Rule 101 and not enter a stabilizing bid pursuant to SEC Rule 104 in the OTCBB; (iii) provide written notice to the Corporate Financing Department of NASD Regulation, Inc. of its intention to impose a penalty bid or to conduct syndicate covering transactions pursuant to SEC Rule 104 prior to imposing the penalty bid or engaging in the first syndicate covering transaction. Such notice shall include information as to the date the penalty bid or first syndicate covering transaction will occur; and (iv) provide written notice to the Market Regulation Department of NASD Regulation, Inc. by the close of business on the day the offering terminates that includes the date and time of the pricing of the offering, the offering price, and the time the offering terminated.
The written notice required by subparagraphs (b)(1)(D)(i),(iii) and (iv) of this rule may be submitted on the Underwriting Activity Report provided by the Corporate Financing Department of NASD Regulation, Inc.
For purposes of subparagraph (b)(I)(D), SEC Rules 100, 101, 103 and 104 are rules of the Commission adopted under Regulation M and the following terms shall have the meanings as defined in SEC Rule 100: "affiliated purchaser", "distribution", "distribution participant", "penalty bid", "reference security", "restricted period", "stabilizing", "subject security", and "syndicate covering transaction."
Impermissible Quotation Entries
No member or person associated with a member shall enter into the Service a priced bid and/or offer, an unpriced indication of interest (including "bid wanted" or "offer wanted" indications), or a bid or offer accompanied by a modifier to reflect unsolicited customer interest in any security that does not satisfy the requirements of Rule 6530.
No member or person associated with a member shall enter into the Service a priced bid and/or offer, an unpriced indication of interest (including "bid wanted" or "offer wanted" indications), or a bid or offer accompanied by a modifier to reflect unsolicited customer interest in any security of an issuer that does not make filing with the Commission through the Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") system (or in paper format, if specifically permitted by Commission Rules) unless the member:
(i) notifies the Association of the issuer of the security's schedule for the filing of all periodic reports or financial reports required pursuant to the Act or regulatory authority, respectively, and the identity of the regulatory authority with which such reports are filed, or ensures that such notice is provided; and (ii) provides to the Association the issuer's periodic reports required pursuant to the Act, or the issuer's financial reports required by regulatory authority, prior to the expiration of the grace period described in Rule 6530(a)(3), or ensures that the required periodic reports are provided to the Association within that time period.
Voluntary Termination of Registration A Market Maker can voluntarily terminate its registration in an OTCBB-eligible security by withdrawing its quotations in that security from the Service. The firm may re-register to quote the security by satisfying the requirements specified above.
More Than One Trading Location In cases where a Market Maker has more than one trading location, a fifth-character, geographic indicator shall be appended to the Market Maker's identifier for that security. Indicators are established by the Association and published in the Nasdaq/CQS Symbol Directory.
Clearance and Settlement
A Market Maker shall clear and settle transactions in OTCBB-quoted securities through the facilities of a registered clearing agency that uses a continuous net settlement system. This requirement applies only to transactions in OTCBB securities that are clearing eligible.
The foregoing requirement may be satisfied by direct participation, use of direct clearing services, or by entry into a correspondent clearing arrangement with another member that clears trades through such an agency.
Notwithstanding subparagraph (A) hereof, transactions in OTCBB-quoted securities may be settled "ex-clearing" provided that both parties to the transactions agree.
Compliance with Market Maker Requirements Failure of a member or a person associated with a member to comply with this Rule may be considered conduct inconsistent with high standards of commercial honor and just and equitable principles of trade, in violation of Rule 2110.
---------------------------------------------- *1. On October 23, 1997, the Commission granted the Association's request to continue a limited exemption from SEC Rule 15c2-11 that permits a broker/dealer to publish in or submit to a quotation medium quotations for a security immediately after such security is no longer authorized for quotation in The Nasdaq Stock Market, without having information specified by the Rule. This exemption is only available if all the following conditions are satisfied: Removal of the security from authorization for quotation on Nasdaq must be attributable solely to the issuer's failure to satisfy the revised initial listing or maintenance standards, as approved in Release No. 34-38961;
The security must have been quoted continuously on Nasdaq during the 30 calendar days preceding its delisting from Nasdaq, exclusive of any trading halt not exceeding one day to permit the dissemination of material news concerning the security's issuer;
The issuer of the security must not be the subject of bankruptcy proceedings;
The issuer must be current in all of its periodic reporting requirements pursuant to Section 13(a) or 15(d) of the Exchange Act;
A broker-dealer relying upon this exemption must have been a Market Maker registered with Nasdaq in the security no longer eligible for quotation on Nasdaq during the 30 day period preceding the security's removal from Nasdaq; and
The exemption is available only for securities that were authorized for quotation on Nasdaq and then were delisted, and not for any other securities of the issuer.
2. By letter dated December 20, 1993, the Commission granted the Association's request for a limited exemption from SEC Rule 15c2-11 under the Act for broker/dealers that publish or submit quotations for publication in the OTCBB Service for certain OTC equity securities. This exemption is not available for American Depositary Receipts or OTC equities issued by a foreign private issuer, within the meaning of SEC Rule 3b-4. Regarding domestic OTC equities, the exemption is available to a broker/dealer, subject to the following conditions at the time such broker/dealer submits or initiates quotations on the OTCBB:
The security is eligible for "piggybacking" pursuant to SEC Rule 15c2-11(f)(3) in another interdealer quotation system;
A broker/dealer relying upon this exemption must itself have published quotations in the security in that 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;
The issuer of the security is not the subject of bankruptcy proceedings;
The issuer of the security is not delinquent in any of its reporting obligations under the Act or rules thereunder, if subject to Section 13(a) or 15(d) of the Act; and
If at any time the Commission subsequently suspends trading in a domestic OTC equity security pursuant to Section 12(k) of the Act, no broker or dealer will initiate or resume quotations in that security on the OTCBB unless the broker/dealer complies with SEC Rule 15c2-11.
**The non-firm or indicative nature of a priced entry is specifically identified on the montage of Market Maker quotations accessible through the Nasdaq Workstation service for this subset of OTCBB-eligible securities. *** Examples of entries that would be considered an update include a Market Maker inserting a new, non-firm priced quotation, substituting an unpriced indication for a non-firm priced entry, or an initial registration without a price.
6541. Limit Order Protection
Members shall be prohibited from "trading ahead" of customer limit orders that a member accepts in securities quoted on the OTCBB. Members handling customer limit orders, whether received from their own customers or from another member, are prohibited from trading at prices equal or superior to that of the customer limit order without executing the limit order. Members are under no obligation to accept limit orders from any customer.
Members may avoid the obligation specified in paragraph (a) through the provision of price improvement. If a customer limit order is priced at or inside the current spread, however, the price improvement must be for a minimum of $0.01 or one-half (1/2) of the current inside spread. For purposes of this rule, the inside spread shall be defined as the difference between the best reasonably available bid and offer in the subject security.
Notwithstanding subparagraph (a) of this rule, a member may negotiate specific terms and conditions applicable to the acceptance of limit orders only with respect to such orders that are:
for customer accounts that meet the definition of an "institutional account" as that term is defined in Rule 3110(c)(4); or
for 10,000 shares or more, and greater than $20,000 in value.
Contemporaneous trades A member that trades through a held limit order must execute such limit order contemporaneously, or as soon as practicable, but in no case later than five minutes after the member has traded at a price more favorable than the customer's price.
Application
This rule shall apply, regardless of whether the subject security is additionally quoted in a separate quotation medium.
This rule shall apply from 9:30 a.m. to 4:00 p.m. Eastern Time. [Adopted by SR-NASD-00-22 eff. Feb. 8, 2001; amended by SR-NASD-01-39 eff. Aug. 1,2001; amended by SR-NASD-2001-78 eff. Nov. 1, 2001; amended by SR-NASD-2002-153 eff. Jan. 6, 2003.]
6545. Trading and Quotation Halt in OTCBB-Eligible Securities
Authority for Initiating a Trading and Quotation Halt
In circumstances in which it is necessary to protect investors and the public interest, Nasdaq may direct members, pursuant to the procedures set forth in paragraph (b), to halt trading and quotations in the over-the-counter ("OTC") market of a security or an American Depository Receipt ("ADR") that is included in the OTC Bulletin Board ("OTCBB") if:
the OTCBB security or the security underlying the OTCBB ADR is listed on or registered with a foreign securities exchange or market, and the foreign securities exchange, market, or regulatory authority overseeing such issuer, exchange, or market, halts trading in such security for regulatory reasons because of public interest concerns ("Foreign Regulatory Halt"); provided, however, that Nasdaq will not impose a trading and quotation halt if the Foreign Regulatory Halt was imposed solely for material news, a regulatory filing deficiency, or operational reasons; or
the OTCBB security or the security underlying the OTCBB ADR is a derivative or component of a security listed on a national securities exchange or The Nasdaq Stock Market ("listed security") and the national securities exchange or The Nasdaq Stock Market imposes a trading halt in the listed security; or
the issuer of the OTCBB security or the security underlying the OTCBB ADR fails to comply with the requirements of SEC Rule 10b-17 regarding Untimely Announcements of Record Dates.
Procedure for Initiating a Trading and Quotation Halt
When a halt is initiated under subparagraph (a)(1) of this rule, upon receipt of information from a foreign securities exchange or market on which the OTCBB security or the security underlying the OTCBB ADR is listed or registered, or from a regulatory authority overseeing such issuer, exchange, or market, Nasdaq will promptly evaluate the information and determine whether a trading and quotation halt in the OTCBB security is appropriate.
Should Nasdaq determine that a basis exists under this rule for initiating a trading and quotation halt, the commencement of the trading and quotation halt will be effective simultaneous with the issuance of appropriate public notice.
Trading and quotations in the OTC market may resume when Nasdaq determines that the basis for the halt no longer exists, or when five business days have elapsed from the date Nasdaq initiated the trading and quotation halt in the security, whichever occurs first. Nasdaq shall disseminate appropriate public notice that the trading and quotation halt is no longer in effect.
Violation of OTCBB Trading and Quotation Halt Rule
If a security is subject to a trading and quotation halt initiated pursuant to this rule, it shall be deemed conduct inconsistent with just and equitable principles of trade and a violation of Rule 2110 for a member:
to effect, directly or indirectly, a trade in such security; or
to publish a quotation, a priced bid and/or offer, an unpriced indication of interest (including "bid wanted" and "offer wanted" indications), or a bid or offer accompanied by a modifier to reflect unsolicited customer interest, in any quotation medium. For purposes of this Rule, "quotation medium" shall mean any quotation system, publication, electronic communication network, or any other device, including any issuer or inter-dealer quotation system, that is used to regularly disseminate quotations or indications of interest in transactions in equity securities. 6550. Transaction Reporting
Member firms that effect transactions in OTCBB-eligible securities shall report them pursuant to the requirements of Rule 6600, except for transactions in Direct Participation Program securities, which shall be reported pursuant to the requirements of Rule 6900.
[Rules adopted on a continuous temporary basis by SR-NASD-88-19 eff. May 1, 1990; amended by SR-NASD-93-25 eff. Dec. 1, 1993; adopted by SR-NASD-93-56 eff. Jan. 5, 1994; amended by SR-NASD-93-74 eff. Mar. 14,1994; amended by SR-NASD-94-08 eff. Apr. 1, 1994; amended by SR-NASD-94-28 eff. Oct. 11, 1994; amended by SR-NASD-96-08 eff. Jan 7,1997.]
Selected Notices to Members: 94-08, 94-29, 94-73.
Applicability
Operation of the Service
OTCBB-Eligible Securities
Requirements Applicable to Market Makers
Limit Order Protection
Trading and Quotation Halt in OTCBB-Eligible Securities
News 
Market Data 
Discover 
