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Trading Over The Counter Bulletin Board Stocks


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Definition of Over The Counter Bulletin Board Stocks

Over The Counter Bulletin Board StocksOver The Counter Bulletin Board Stocks trade on the Over The Counter Bulletin Board (OTC BB) stock quotation system.  The Over The Counter Bulletin Board stock quotation system is not a stock market in the traditional sense because it does not have the same types of stringent listing requirements regarding market capitalization, minimum share price, and corporate governance that major stock markets enforce, such as the New York Stock Exchange (NYSE) and NASDAQ, have.  Rather, it is an electronic trading platform in which shares in Over The Counter Bulletin Board Stocks that meet the minimal Over The Counter Bulletin Board requirements are approved to list their buy (bid) and sell (ask) offers to market participants through the Over The Counter Bulletin Board quotation system.

What distinguishes Over The Counter Bulletin Board Stocks from over the counter stocks that trade on the other over the counter quotation system, known as Pink Sheets, is that Over The Counter Bulletin Board Stocks must be fully compliant in their reporting to the Securities and Exchange Commission (SEC).  Companies that are not fully compliant in their reporting to the SEC are routinely banned from listing their quotes on the Over The Counter Bulletin Board and often wind up trading on the Pink Sheets, which has no such SEC compliance requirement.

Facts About Over The Counter Bulletin Board Stocks

The Over The Counter Bulletin Board provides quotes for more than 3,000 securitiesassociated with both domestic companies within the United States and internationalcompanies.  Over The Counter Bulletin Board Stocks are mainly penny stocks that trade for under $1.00 per share.  However, despite the perception that the Over The Counter Bulletin Board is exclusively a penny stock quotation system, approximately 10% of the stocks that are quoted on the Over The Counter Bulletin Board trade for over $1.00 per share, some for more than $200 per share.  The lack of listing requirements makes the Over The Counter Bulletin Board appealing for companies that either cannot achieve the listing requirements that major exchange have or do not wish to list on a major exchange, so they can avoid the paperwork involved in a major stock exchange listing.

Most stock market traders are interested in trading the Over The Counter Bulletin Board Stocks that are penny stocks, due to their potential for substantial gains.  Buying and selling penny stocks is done via either online or live stock brokers, in the same way that stocks listed on major exchanges are traded.  The big difference is that trading volumes for Over The Counter Bulletin Board Stocks are usually less than listed stocks, and therefore initiating and closing positions in Over The Counter Bulletin Board Stocks is a bit harder to complete.  For more information about how to buy and sell Over The Counter Bulletin Board Stocks, see How to Invest In Penny Stocks and Where to Invest In Penny Stocks.

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