The OTC Pink, now branded as the Pink Open Market, is the lowest and most speculative tier of the three marketplaces for the trading of 澳洲幸运5官方开奖结果体彩网:over-the-counter (OTC) stocks. All three tiers are provided and operated by the 澳洲幸运5官方开奖结果体彩网:OTC Markets Group. This marketplace offers to trade in a wide range of equities through any broker and incl🔴udes companies in default or financial distress🐲.

Since it has no disclosure requirements, the categorization of OTC Pink companies is from information provided by the company. OTC Markets Group now markets OTC Pink as the Pink Open Market, but the historical name still persists.

Understanding OTC Pink

The over-the-counter (OTC) market is a decentralized market where securities, not listed on major exchanges, are traded directly by a network of dealers. Instead of providing an order matchmaking service like the NYSE, these dealers carry inventories of securities to facilitate any buy or sell orders. Because information was initially printed on pink paper, the OTC Pink is also referred to as the 澳洲幸运5官方开奖结果体彩网:Pink Sheets.

The OTC Pink, as well as its companion tiers, OTCQX and OTCQB, is run by OTC Link. The link is an electronic inter-dealer quotation and trading system developed by OTC Markets Group. Registered with the SEC as a broker-dealer, OTC Link is also an 澳洲幸运5官方开奖结果体彩网:alternativeಌ tradi🥃ng system (ATS).

OTC Link allows broker-dealers not only to post and disseminate their quotes but also to negotiate trades through the system’s electronic messaging capability. This feature enabled it to replace the 澳洲幸运5官方开奖结果体彩网:Over-the-Counter Bulletin Board&nb🀅sp;(OTCBB), which was a quotation-only system.

On November 8, 2021, the Financial Industry Regulatory Authority (FINRA) chose to discontinue the OTC Bulletin Board (OTCBB), a quotation system it operates between dealers, and remove all OTCBB-associated rules from its rulebook.

Regulation of the OTC Pink Marketplace

Because of the variable, self-repor🐼ting nature by OTC Pink companies, they are classified based on the quality and quantity of information they provide to investors. Classification is as follows.

• Current Information companies are those that follow the 澳洲幸运5官方开奖结果体彩网:International Reporting Standard or Alternative Reporting Standard. These companies make filings publicly available through the OTC Disclosure & News Service.
• Limited Information companies include troubled firms in 澳洲幸运5官方开奖结果体彩网:financial distress, 澳洲幸运5官方开奖结果体彩网:bankruptcy, or those with accounting issues. This category also includes companies that are unwilling to meet the OTC Pink Basic Disclosure Guidelines.

The Pink Open Market previously had a category of No Information securities, which identified companies with the lowest level of disclosure—those that had not filed any information with either the SEC or the OTC Disclosure and News Service in six months. Such securities were considered highly risky for investors. In 2021, following updated SEC transparency rules, securities that were once labeled “No Information” moved to OTC Market Group’s Expert Market, which is only available to broker-dealers and other professional investors, not to the general public. They𒅌 are not prom✨oted as investment options for average investors. 

All broker-dealers that trade on the OTCQX, OTCQB, and OTC Pink securities have to be Financial Industrဣy Regulatory Authority (FINRA) members. Further, they must register with the SEC and are subject to state securities regulations. In this way, as with exchange-traded securities, investors trading OTC securities are protected from an unethical broker-dealer’s illegal practices by the same SEC and FINRA rules such as 澳洲幸运5官方开奖结果体彩网:Best Execution, Limit Order Protection, Firm Quotes, and Short Position Disclosure.

Who Should Invest Through OTC Pink?

OTC Pink provides for transparent trading and best execution, although there are no financial standards or disclosure requirements. The marketplace trades a wide range of domestic and foreign companies including 澳洲幸运5官方开奖结果体彩网:penny stocks, shell companies, distrꦗessed companies, a𝔉nd dark companies that cannot or will not provide company information to investors.

Because of the lack of reporting requirements, only professional and sophisticated investors with a high risk-tolerance should trade here. Investors should perform all the proper 澳洲幸运5官方开奖结果体彩网:due diligence by researching the companies 💟they are considering and revi꧂ewing all business activities.

Terminology Updates

It should be noted that the terms "Pink Sheets" or "OTC Pink" are considered outdated in the context of today's financial markets. The terminology that was once known as Pink Sheets has evolved into the OTC Markets Group, which operates regulated marketplaces for 澳洲幸运5官方开奖结果体彩网:trading over-the-counter stocks. These include the OTCQX, OTCQB, and Pink markets, each with varying levels of financial standards and regulatory oversight. Thus, referring to these markets collectively as "Pink Sheets" or "OTC Pink" is no longer accurate. However, the terms PINK or Pink market are still in everyday language, as seen in the 2022 Market Data Annual Review.

The Pink market operates as an open marketplace with no obligatꦅory financial standards or disclosure requirements. Companies in this tier are not mandated to register their stock with the SEC. Depending on the quantity and promptness of information they share with investors, these companies can be further divided into categories, such as current, limited, or no public disclosure.

The regulatory structure of the Pink market has changed over the past couple of years. For instance, components such as "dark securities" have been entirely shifted out of the market.

The Bottom Line

The terminology of former OTC Pink or Pink Sheets ♐has changed, and so have certain regulatory developments. Pink Markets, or Pink Open Market, is an over-the-counter trading platform for stocks not listed on major exchanges, often involving smaller companies, foreign entities, or those seeking less regulation. While it provides opportunities for speculators and investors looking beyond traditional markets, it carri🅺es significant risks, including limited financial information, high volatility, and potential for fraudulent activity. Recent regulatory changes aim to increase transparency and reduce risk in this speculative market.