Getting Your Stock Traded

Getting Your Stock Traded

 

How does a company get quoted?
To get quoted, you need to find one market maker willing to quote your company’s stock. Only SEC-registered broker-dealers (market makers) that are members of the Financial Industry Regulatory Authority (FINRA) can quote securities. The market maker must file a Form 211 with FINRA in order to start quoting.

 

How can I find a market maker to file a Form 211?
We cannot recommend specific market makers. However, a list of market makers is available upon request. We welcome potential issuers to contact them to discuss making a market in their company’s stock.

 

Is there a way to get quoted without a Form 211?
Yes, if a market maker determines the security is eligible for one of the following exceptions under SEC Rule 15c2-11:

  • The security is currently listed on a U.S. exchange.
  • The market maker 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
  • The security is piggyback eligible. A security becomes piggyback eligible when it has been quoted by at least one market maker for a minimum of 30 days.
  • The “Globenet Exemption.” Under this exemption, a market maker can initiate a quotation for an OTCBB-only quoted security without submitting a Form 211 to FINRA, 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 1.03 (Bankruptcy or Receivership), Item 2.01 (Acquisition or Disposition of Assets), Item 4.01 (Changes in Registrant’s Certifying Accountant), Item 5.01 (Changes in Control of Registrant), and Item 5.02 (Departure of Directors or Certain Officers) 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.

 

 

What if I’m delisted from an Exchange?
Delisting 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 on the OTC system 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 OTC Markets to enter a quote any time prior to market close on the day of delisting, without submitting a Form 211. Generally, the security will become “piggyback qualified” in the OTC system 30 days after delisting, at which time other market makers may enter a quote in the OTC system without submitting a Form 211 to FINRA. A delisted NASDAQ issuer that wishes to be quoted in the OTC system should contact their market makers to request that they register to quote the security in the OTC system.
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 the OTC system on the day of delisting, then the usual Form 211 filing and review process will apply. However, many NASDAQ-listed securities are already quoted on the OTC system on an unpriced basis.
Delisted from NYSE or AMEX
If a security is delisted from The New York Stock Exchange or from the American Stock Exchange, then the usual Form 211 filing and FINRA review process will apply. However, some exchange-listed securities are already quoted in the OTC system 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 OTC system for the 30 days prior to delisting could continue to make a market in the OTC system upon delisting. The security generally becomes “piggy-back qualified” the same day it is delisted and any other market maker can then publish quotes in the OTC system without first submitting a Form 211 to FINRA.

 

 

Are there any filing requirements in the OTC market?
Issuers are not required to register securities with the Securities and Exchange Commission (SEC), or be current in their reporting requirements to be quoted on the OTC system. Nor are issuers required to file financial or other company information with OTC Markets. However, issuers are classified for investors based on the level of information they do provide about their company.
SEC Rule 10b-17 requires all issuers of publicly traded securities, including all OTCQX, OTCQB and OTC Pink securities, to notify FINRA at least 10 calendar days prior to the record date of any dividend or other distribution, stock split, reverse split, or rights or subscription offering.

 

Do financial statements have to be audited?
Current FINRA rules do not require the financial statements of non-SEC reporting issuers to be audited in order for them to clear a Form 211, but they should be prepared in accordance with GAAP or, for foreign issuers, in accordance with their home country’s accounting standards.

 

What are the fees?
There is no fee for issuers to have their stock quoted on the OTC inter-dealer quotation system. Market makers are charged for each security in which they make a market in the OTC system and are prohibited by FINRA Rule 2460 from accepting payment by an issuer or their affiliate for publishing quotes.

 

How are trading symbols assigned?
FINRA assigns all OTC security symbols. Any security that does not already have a symbol will be assigned one when FINRA clears the Form 211. FINRA does not permit issuers or market makers to choose trading symbols.

 

How do I get my company “delisted” from the OTC Market?
Because securities are not “listed” in the OTC Market, it is not possible for an issuer to “delist” them. The only way to remove a company from the OTC market is for all of the market makers to stop quoting it. If your company’s securities no longer actually exist, but are still being quoted, you should contact FINRA’s Market Integrity Department at 866-776-0800 and provide them documentation to that effect. FINRA will investigate and, if appropriate, eliminate the trading symbol and advise the OTC Markets Group. We will then remove the market makers quotations in this security.

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