OTC Bulletin Board
The board was used for many over-the-counter (OTC) equity securities that are not listed on the NASDAQ or a national stock exchange, it has shrunk significantly as stock have migrated to the trading facilities of the OTC Markets Group. Broker-dealers who subscribe to the system, which is not electronic, can use the OTCBB to enter orders for OTC securities that qualify to be quoted. According to the U.S. Securities and Exchange Commission (SEC), "fraudsters often claim or imply that an OTCBB company is a Nasdaq company to mislead investors into thinking that the company is bigger than it is".
FINRA, an "independent, not-for-profit organization authorized by Congress", runs and provides regulatory services to the OTCBB by "writing and enforcing rules governing the activities of more than 4,100 securities firms with approximately 639,780 brokers". The OTCBB formerly collected 100% of quotes, but that number has declined with the rise of its competitor OTC Markets Group, which uses an electronic quotation system. In September 2009, FINRA announced that it would be selling the OTCBB. OTC Markets Group was the leading contender for purchasing the OTCBB, but terms could not be reached. In September 2010, FINRA announced that it had reached terms for the sale of the OTCBB with Rodman & Renshaw, an investment bank. Along with the sale of the OTCBB and, in an effort to provide uniform regulation to all OTC issues and, subsequently, transparency to the OTC market, FINRA has proposed a "quotation consolidation system". Under the quotation consolidation system, FINRA would require dealers to report all of their quotes to the quotation consolidation system, regardless of the market upon which they were originally quoted. This would enable FINRA to have access to all quotes in OTC issues and regulate the OTC market in its entirety. Pink OTC argues this is anti-competitive and an abuse of FINRA's authority.
Companies quoted on the OTCBB must fully report (i.e., current with all required SEC filings) but there are no market capitalization, minimum share price, corporate governance or other requirements to be quoted. Companies which have been "de-listed" from stock exchanges for falling below minimum capitalization, minimum share price or other requirements often end up being quoted on the OTCBB. An E after the ticker symbol means the company was late in its SEC filings.
Stock of non-reporting companies (those without current SEC filings) may be quoted on one of the markets operated by OTC Markets Group. Most OTCBB companies are dually quoted, meaning they are quoted on both the OTCBB and the one of those OTC Markets Group markets. Stocks traded on these markets are usually thinly traded microcap or penny stocks, and both retail and institutional investors generally avoid them, because of fears that share prices are easily manipulated and there exists a potential for fraud. The SEC issues stern warnings to investors to beware of common fraud and manipulation schemes. As such, most companies choose to list on more established exchanges such as the NYSE MKT, New York Stock Exchange, or NASDAQ once eligible. FINRA believes that the proposed "quotation consolidation system" would enhance transparency, thereby decreasing the potential for price manipulation or fraud.
The suffix ".OB" in a stock-ticker listing signifies "over-the-counter bulletin board" according to its Reuters Instrument Code.