The OTC bulletin board, often called the OTCBB, was an electronic system that showed prices for small companies that did not trade on a major exchange. Many investors still use the name today.
The world has changed, though. Here is what the OTC bulletin board was, and where those stocks are quoted now.
What the OTC bulletin board was
The OTCBB gave smaller companies a place to have their stock quoted. Brokers could see prices and send orders, even though the company was not listed on a big exchange.
To be quoted, companies generally had to stay current with their public filings. That rule gave investors at least a baseline of information.
Why people still say OTCBB
Old habits stick. Many articles, websites and investors still use the term for any small stock that trades over the counter.
Because of that, you will see OTCBB in search results and in older company materials, even when the stock is quoted somewhere else.
Where these stocks trade now
Most quoting of over the counter stocks now runs through OTC Markets Group. It sorts companies into tiers, such as OTCQX, OTCQB and Pink.
The top tier has higher standards. The lower tiers have fewer rules and less information. So the tier tells you a lot about how much you can learn before you invest.
What the OTC bulletin board teaches us today
Over the counter stocks can be risky. Trading volume is often thin, prices can jump around, and information can be limited.
Still, some solid small companies trade there too. The key is to read their filings and understand the tier.
Also remember that moving up to a major exchange, often called uplisting, is a goal for many of these companies.
A short example of a tier check
Suppose you hear about a small company quoted over the counter. Open its profile on the OTC Markets site and find the tier. If it is in a top tier, the company meets higher standards and shares more information.
If it sits in a lower tier with limited information, treat it like a mystery box. You can still read its filings, but expect to do more homework.
Either way, never rely on the tier alone. It is a starting point, not a guarantee.
How to research an OTC company
Start on the SEC EDGAR site and read the latest reports. Then check the company profile on the OTC Markets website to see its tier and disclosure level.
After that, compare its sales and cash with its promises. If the story and the numbers do not match, move on.
Questions to ask about any OTC stock
Is the company current in its reports? Which tier is it in? Also, how much does it trade each day? Who is promoting it, and are they paid?
Honest answers to these questions will keep you safer than any tip.
Keep learning
The OTC bulletin board is mostly history, but its lessons still matter. Read our guide to OTC and penny stock marketing, learn the terms in the glossary, and try a game that sharpens your research eye.
OTC and penny stock marketing | Investing glossary | What are penny stocks | OTC Markets Group
This article is for education only. It is not investment advice, and it does not promise any result.
How the OTC Bulletin Board worked
The OTC Bulletin Board, often called the OTCBB, was an electronic quotation service for over the counter stocks. It was never an exchange. It listed quotes from market makers for companies that were not on Nasdaq or NYSE. For many years it was the main home for smaller companies. Today most of that activity has moved to the OTC Markets tiers, and the old OTCBB name is mostly historical.
Today’s OTC tiers
The main tiers are OTCQX for companies that meet higher standards, OTCQB for venture stage companies that are current in their reporting, and the Pink market, which includes companies with limited or no disclosure. The tier tells you something about the amount of information a company shares. More disclosure generally means easier research.
Risks to understand
Over the counter stocks can have low trading volume, wide spreads between the buying and selling price, and sudden moves on little news. Some companies share very little information. Those facts make research harder and losses more likely. Be careful with any stock that is promoted loudly. See our guide to penny stock promotion red flags.
How to approach OTC companies
Read the latest filings or disclosure statements. Check the tier. Look at cash, debt and the share count over time. Use limit orders, which let you set the price you will pay, and keep position sizes small. Treat any OTC stock as higher risk. Our position size tool can help you decide how much risk you are taking.
Keep reading
- Micro Cap vs Nano Cap: Sizing Up the Smallest Companies
- Small Cap Stocks: What They Are and Why They Move
- Uplisting From OTC to Nasdaq: A Guide
This article is for education only and is not investment advice.