Trading Services FAQs

How do I begin quoting/trading off-exchange securities?
What regulations do I need to be aware when quoting/trading off-ecxhange securities?
What is Rule 15c2-11?
What is the Piggy-Back rule?
Do I still have to report trades to FINRA?
Do I have to file a Form 211 for a security that has been delisted from the New York Stock Exchange, NASDAQ or NYSE-AMEX?
Are the priced quotes in the OTC Link system considered firm by FINRA rules?
What would constitute "backing away" within the OTC Link system?
Are there minimum quote sizes in the OTC market?
Are there quote price increments for OTC securities?
Is there a way quote a security without a Form 211?
Is there a 15c2-11 exemption for unsolicited quotes?
What are OTC Markets Group's guidelines regarding the publication of unsolicited quotes?

How do I begin quoting/trading OTC securities?     Top
Only FINRA registered broker-dealers may quote and trade OTC securities. “Market Making” firms may quote and trade while “Order Entry” firms may only trade. FINRA determines the broker-dealer’s status. Once FINRA has assigned your firm a Market Participant Identifier (MPID), you may contact OTC Markets Group's Trading Services department at tradingservices@otcmarkets.com or 800.LIST.OTC to begin the enrollment process.

What regulations do I need to be aware when quoting/trading OTC securities?     Top
The best source for all of the applicable rules governing the OTC market may be found in the FINRA Manual. OTC Markets provides a synopsis of the FINRA Rules in the “OTC Market Regulation” document, including the rules surrounding Firm Quotes (FINRA Rule 5220), Minimum Quote Sizes (FINRA 6433), Best Execution (FINRA Rule 2320), and others.

What is Rule 15c2-11?      Top
Rule 15c2-11 under the Securities and Exchange Act of 1934 (Exchange Act) governs the submission and publication of quotations by brokers and dealers for OTC equity securities. Specifically, the rule applies to a broker-dealer's initiation or resumption of quotations for such securities in any inter-dealer quotation system, including OTC Link. Pursuant to the Rule, brokers and dealers are required to review and maintain specified information about the issuer of the security before publishing a quotation for that security. See complete text of SEC Rule 15c2-11. Get a copy of the Form 211.

What is the Piggy-Back rule?      Top
The Piggy-Back rule stipulates that a security is eligible for quoting under Rule 15c2-11 without the submission of a Form 211. Any authorized market maker may begin quoting piggy-back eligible securities at any point in time. The "piggy-back" exception is based on a market maker publishing quotations for a security in an applicable interdealer quotation system (OTC Link or the OTCBB) on at least 12 business days during the preceding 30 calendar days, with not more than four consecutive business days without quotations.

Do I still have to report trades to FINRA?      Top
Yes – you are responsible for reporting trades to FINRA through ORFTM. OTC Markets offers a number of services that automate the reporting process. You may receive FIX drop copies messages to integrate into your internal systems or drop copies may be sent to a third party Order Management System (OMS) such as BRASS. OTC Markets can also submit executions directly to FINRA’s ORF, formerly known as ACT, on your behalf.

Do I have to file a Form 211 for a security that has been delisted from the New York Stock Exchange, NASDAQ or NYSE-AMEX?      Top
Yes – listing on NYSE, NASDAQ or NYSE-AMEX does not exempt a Market Maker from filing a Form 211. If, however, the security was quoted on OTC Link prior to the delisting it may be considered "piggyback" eligible.

Are the priced quotes in the OTC Link system considered firm by FINRA rules?     Top
FINRA Rule 5220 provides that no member shall make an offer to buy from or sell to any person any security at a stated price unless such member is prepared to purchase or sell, as the case may be, at such price and under such conditions as are stated at the time of such offer to buy or sell. For purposes of compliance with FINRA Rule 5220, unless designated as a non-firm quotation by the broker-dealer or by the rules of the inter-dealer quotation system, any priced order to purchase or sell a security would be considered a firm quote and the member would be expected to execute that order at its published quotation size. See complete FINRA Rule 5220.

What would constitute "backing away" within the OTC Link system?      Top
Backing-away occurs when a member firm fails to execute an order "presented" to it at a price at least as favorable as its published quotation up to its published quotation size.

Are there minimum quote sizes in the OTC market?      Top
Yes – FINRA Rule 6433 defines the minimum quote sizes for different price levels. See complete Rule 6433.

Are there quote price increments for OTC securities?     Top
OTC Markets sets price increments for OTC Link-only securities – securities that are quoted only on our OTC Link system. The below rules do not apply to securities quoted on both OTC Link and the OTCBB or only on the OTCBB.

Quote increment rules:

  • For quote prices above $1, a quote tick size of 0.01
  • For quote prices under $1, a quote tick size of 0.0001

For securities priced below $1, quote “rounding” rules will be eliminated as the quote increment is now the smallest interval allowed in OTC Dealer and through OTC FIX. Quote rounding will continue to be applied for securities priced above $1.

Is there a way quote a security without a Form 211?      Top
Yes, if a broker-dealer 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 broker-dealer wishes to submit an unsolicited quote. An unsolicited quote represents a customer order and not a broker-dealer’s own position and must be removed from the system once the customer order is executed. See the unsolicited quote FAQs.
  • The security is piggyback eligible. A security becomes piggyback eligible when it has been quoted on the OTC Link system 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 on the OTC Link system 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; [Updated in 2004 per Modification of 15c2-11 Exemptive Letters]
    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.

Is there a 15c2-11 exemption for unsolicited quotes?      Top
Yes - SEC Rule 15c2-11 provides an exemption to filing a Form 211 with FINRA for broker-dealers that wish to publish 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. Compliance with this rule is monitored by FINRA.

What are OTC Markets guidelines regarding the publication of unsolicited quotes?      Top
OTC Markets has become increasingly concerned that the unsolicited quote exception in SEC Rule 15c2-11 is being abused by unscrupulous individuals to engage in questionable and possibly fraudulent activities in violation of the federal securities laws. OTC Markets, as a matter of policy, does not believe that the Unsolicited Quote Exemption should be used to circumvent FINRA's 211 process. As a result, effective February 6, 2006, OTC Markets is limiting the publication of unsolicited quotes to securities of seasoned issuers only. A seasoned security is generally defined as a security for which there has previously been a public market or a security of an issuer that has other seasoned securities.

OTC Markets generally will publish unsolicited quotations in securities that meet one of the following five conditions:

  1. The Issuer of the securities is subject to Section 13 or 15(d) of the Exchange Act, is current in its filing obligations and has other seasoned securities currently trading on the NYSE, AMEX, NASDAQ, or quoted on OTCBB or OTC Link.
  2. The securities were recently delisted from NYSE, AMEX, NASDAQ or deleted from the OTCBB;
  3. The Issuer is a bank, savings and loan, or insurance company;
  4. The securities were issued as part of a bankruptcy plan of reorganization; or
  5. The security being quoted is a foreign ordinary, which is listed on a foreign exchange, or an ADR representing such ordinaries

In order to publish an unsolicited quote for a security that meets one of the above conditions and is not already quoted on the OTC Link system, a broker should submit the Broker/Dealer Unsolicited Quote Entry form to OTC Markets Group.

Issuers of previously unseasoned securities that had quotations published on OTC Link prior to February 6, 2006 using the unsolicited quote exemption and continue to be quoted only on an unsolicited basis are required by OTC Markets to continue to make periodic disclosure using the OTC Disclosure and News Service. If the Issuer ceases to provide current information, OTC Markets may cease to allow broker/dealers to publish quotes in its securities.

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