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The Pink Sheets Market Tiers

By: Nir Dotan

Over the years, the Pink Sheets has been practically synonymous with over the counter stock trading, and with what have been pejoratively known as penny stocks.

While not a stock exchange, the Pink Sheets has been, and still is, one of the go-to places for market makers and investors seeking to deal in over the counter stocks. Ever since it began as listing of quotes printed on pink sheets of paper to its transformation to an electronic and online stock quoting system, the Pink Sheets has been known for having all sorts of company stocks traded there:

legitimate companies seeking capitalization for expansion,

distressed companies with poor financial outlooks,

legitimate companies who have real operations,

shell companies,

American and foreign companies,

companies that comply with the Securities and Exchange Commission requirements to be listed in both the Pink Sheets and Over the Counter Bulletin Board,

companies unable or unwilling to comply with
U.S. Federal requirements, and a combination of these characteristics.

The Pink Sheets has recently introduced an internal market tier system to help investors in deciding which stocks to trade. This market tier system has been implemented in order to increase the amount of information available to investors and potential investors, and thus reduce the risks involved in dealing with over the counter stocks.

Called the Pink Sheets OTC Market Tier, it categorizes companies whose stocks are quoted in the Pink Sheets Electronic Markets in one of these primary tiers, listed in decreasing order of investor worthiness: OTCQX market tier, Pink Sheets market tier, and the Grey Market. In addition, there is a special categorization called Caveat Emptor.

The OTCQX market tier is the highest primary tier, with companies that comply with specific registration standards and sufficient total market requirements. The OTCQX tier has several secondary tiers: Premier QX, Prime QX, International Premier QX, and International Prime QX.

The Pink Sheets market tier contains the following classifications: Pink Quote OTCBB (noted by PB), OTCBB only (noted by BB), and Pink Sheets Current Information (noted by PS). Other classifications in the Pink Sheets market tier are Pink Sheets Limited Information (marked by a Yield sign), and Pink Sheets No Information (marked by a Stop sign).

The Grey Market category is for company stocks and securities that currently do not have a market maker in either the Pink Sheets or Over the Counter Bulletin Board. Trade in these securities is done independently and not centrally processed.

The Caveat Emptor is a special sign reserved for companies with known investigation of fraudulent or questionable activities committed by company insiders. It is also given to companies that have been handed regulatory suspensions, as well as those that have questionable stock promotions. Companies given the Caveat Emptor sign are blocked from having their quotes listed in the Pink Sheets if they do not at least qualify for the Current Information category.

In effect, a Prime QX company that is currently undergoing investigation could still be quoted in the Pink Sheets despite the Caveat Emptor sign, while those companies in the Limited Information category could not be quoted in the Pink Sheets if they are undergoing investigation.

In summary, any of the stocks quoted in the Pink Sheets would be classified in one of the following 10 tiers, listed in decreasing order of investor worthiness: Premier QX, International Premier QX, Prime QX, International Prime QX, Pink Sheets Current Information (PS), Pink Sheets OTCBB (PB), OTCBB only (BB), Limited Information, No Information, and Grey Market. The Caveat Emptor sign is given to companies undergoing investigation or have an ongoing public concern.

Article Source: http://www.bluearticles.com


Nir Dotan is a writer and promoter of
Pink Sheets
services, and
Pink Sheets Preferred source for the latest news and information on the best and brightest Stocks Investment.

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