What are Penny Stocks?
A penny stock is a stock that trades at a relatively low price and marketcapitalization, usually outside of the major market exchanges. These types of stocksare generally considered to be highly speculative and high risk because of their lackof liquidity, large bid-ask spreads, small capitalization and limited following anddisclosure. They will often trade over the counter through the OTCBB and pinksheets. The term itself is a misnomer because there is no generally accepteddefinition of a penny stock. Some consider it to be any stock that trades for penniesor those that trade for under $5, while others consider any stock trading off of themajor market exchanges as a penny stock. However, confusion can occur as thereare some very large companies, based on market capitalization, that trade below $5per share, while there are many very small companies that trade for $5 or more.The typical penny stock is a very small company with highly illiquid and speculativeshares. The company will also generally be subject to limited listing requirementsalong with fewer filing and regulatory standards.
What is the OTC BB?
The OTC Bulletin Board® (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equitysecurities. An OTC equity security generally is any equity that is not listed or traded onNASDAQ or a national securities exchange. OTCBB securities include national,regional, and foreign equity issues, warrants, units, American Depositary Receipts(ADRs), and Direct Participation Programs (DPPs)
What is the Pink Sheets?
The Pink Sheets is a centralized quotation service that collects and publishes marketmaker quotes for OTC securities in real-time. Pink Sheets is neither a Securities andExchange Commission (SEC) Registered Stock Exchange nor a Broker-Dealer
What¶s the difference between Pink Sheets and OTC BB?
Pink Sheets and the OTCBB are competing quotation services for OTC securities. PinkSheets is a privately owned company, while FINRA operates the OTCBB. Unlike theOTCBB, issuers do not have to be fully reporting companies with the Securities andExchange Commission (SEC) to be quoted on Pink Sheets. The Pink Sheets' OTCDealer provides market makers with dynamic tickers and quote montages and anelectronic trade negotiation system, while the OTCBB does not provide thisfunctionality.