FINRA Proposes Expansion Of The OTCBB
In August 2016, FINRA quietly requested comment on a proposal to expand the now largely dormant OTC Bulletin Board quotation service (“OTCBB”) as a backup inter-dealer quotation system for OTC Equity securities. As part of the proposal, the OTCBB would be renamed and branded as the Over the Counter Display Facility or “ODF.” Previously, on October 7, 2014, the SEC published a release instituting proceedings to determine whether to approve FINRA’s request to delete the rules related to, and the operations of, the OTCBB. My blog on the proposal can be read HERE.
However, on March 12, 2015, FINRA withdrew the proposed rule change and request to delete the OTCBB. Although the March 12, 2015 withdrawal did not cite reasons, in its new request for comment, FINRA indicates it withdrew the proposal in response to SEC staff requests that FINRA continue to operate alternative quotation facility.
Since that time the OTCBB has remained largely relatively dormant. According
SEC Grants Accelerated Approval to FINRA Rule Amendment Regarding Minimum Quotation Size Requirements for OTC Equity Securities
On June 15, 2012, the SEC granted accelerated approval to an amendment to FINRA rule 6433 related to the minimum quotation size for OTC equity securities. Rule 6433 applies to all market makers. Rule 6433 sets forth the specific minimum quotation size requirements in tiers that are based on the price of the OTC equity security being quoted by the market maker. In addition, the rule change will require market makers to publish customer limit orders.
The new rule amends and lowers the current 9 tier quotation size requirements to 6 tiers as follows:
- $175.00 per share and above, the minimum quotation size would be 1 share;
- $1.00 through $174.99 per share, the minimum quotation size would be 100 shares;
- $0.51 through $0.9999 per share, the minimum quotation size would be 1,000 shares;
- $0.20 through $0.5099 per share, the minimum quotation size would be 2,500 shares;
- $0.10 through $0.1999 per share, the minimum quotation size would be 5,000 shares;