Is the OTC Bulletin Board on its Deathbed?

July 17, 2010 -- One has to wonder whether the OTC Bulletin Board is on its deathbed. The OTC Bulletin Board (OTC BB) was created 20 years ago as a way of enabling smaller capitalization publicly traded companies who didn't qualify for NASDAQ or the American Stock Exchange to have a trading facility for their shares. At the time of its creation, the OTC Bulletin Board provided a more transparent trading platform than the Pink Sheets.  But the OTC Bulletin Board has not kept up with technology, and many believe that it has now outlived its usefulness. 

Today the OTC Bulletin Board is owned by the U.S.’s Financial Industry Regulatory Authority (FINRA).  It’s generally acknowledged that FINRA isn’t interested in owning the OTC BB, and has made no attempt at upgrading the trading platform’s technology.  FINRA’s primary responsibility is as a securities industry regulator.  As a regulator there is a definite conflict in also managing the OTC BB.  Since last September FINRA has been trying to sell the OTC Bulletin Board but so far there has been no news as to any potential transactions underway to acquire it. And one has to wonder whether the OTC BB has any value whatsoever.

Over the past months increasing trading activity of companies on the OTC BB have been taking place on OTC QB, which is owned by Pink OTC Markets, which provides a fully transparent electronic trading platform for smaller capitalization public companies who are fully-reporting with the U.S. Securities and Exchange Commission.  With most of the share trading activity for companies whose shares are on the OTC BB now taking place on the OTC QB, one has to wonder how long the OTC Bulletin Board will be around.

Editor - Jeffrey Friedland