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OTCQB -what you need to know


OTC Market Group is American financial market with headquarters in New York City that provides price and liquidity information for almost 10,000 over-the-counter securities. Stating that they recognize that companies come in different shapes, sizes and stages of development so one standard is not suitable for all OTC Market Group has three different market tiers: OTCQX, OTCQB and Pink. Each tier have different standards, reporting requirements and level of disclosure.

Pink market tier is considered the lowest because it doesn't have financial standards or reporting requirement. Stock in Pink tier are not required to be registered with the SEC. Companies have the opportunity to upgrade their status to OTCQB market if they met certain requirements, giving investors most current information possible while reducing the trading limits and restrictions companies may face on the Pink Market.

OTCQB Venture Market, middle tier in OTC Market Group, is for early-stage developing U.S. and international companies. Companies must met one penny ($0.01) bid price requirement. To qualify companies have to be current in their reporting, including information abut company's reporting status and profile, management and board, major shareholders,  transfer agent, law and PR/IR firms. Each company has to be subjected to annual verification and management certification process.

U.S. companies must have financial audited by a PCAOB auditor unless company is Tier 2 Regulation A. Besides the obvious requirement that company is not in bankruptcy it must have at lest 50 beneficial shareholders that own at least round lot of 100 shares. Freely traded public float must be at least 10% of outstanding shares but if a company has public float of 5% and $2 million in market value it can file for exemption or if company has separate class of securities that trade on national exchange.

Inlike securities listed on stock exchanges, securities listed on OTCQX, OTCQB and Pink markets can trade without being registered with SEC but they have to follow one of five reporting standards: SEC, Regulation A, U.S. Bank, International or Alternative reporting standard depending on a company. OTCQB companies that don't report to the SEC, U.S Bank regulators or Qualified Foreign Exchange can follow Alternative report standard. Companies provide current and potential investors with information that help them make sound and informed investment decisions. Providing investors with relevant information help them to have a better understanding of company's business operation and prospects and in the same time improves investors confidence.

Annual fee for OTCQB Market is $12,000 and one-time $2,500 application fee.
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