NASDAQ vs. OTC:BB
The following investor protection rules, which apply to the Nasdaq market, do not currently apply to the OTCBB:
Limit Order Protection -- Limit Order Protection rules prohibit NASD member firms from trading ahead of customer limit orders in Nasdaq securities.
Limit Order Display -- The Limit Order Display Rule requires a market maker that receives a customer limit order priced at or better than its current quote and does not immediately execute the order, to display the order to the entire marketplace. Alternatively, the market maker can choose to send the order to another market maker or ECN for display.
The following are investor protection measures that apply only to the OTC market:
Penny Stock Rules -- These rules address sales-practice abuses and manipulation in penny stocks by requiring broker/dealers, prior to effecting a customer transaction in a penny stock, to approve the customer's account for transaction in penny stocks and to provide investors with material market and other information before effecting a transaction in a penny stock. (SEC Rule 3a51-1 provides a formal definition of a "penny stock." Among the criteria necessary to be classified as a penny stock is a share price of less than $5.)
Risk Disclosure -- SEC rules require broker/dealers to receive written acknowledgement from a customer that the customer has received a Risk Disclosure Document that defines the term penny stock and identifies certain risks associated with investing in penny stocks.
The following are investor protection measures that apply to both the Nasdaq and OTC markets:
Best Execution Rule -- This rule requires broker/dealers to exercise "reasonable diligence" in obtaining the best possible price for their customers under prevailing market conditions. For OTC securities, this includes obtaining quotations from a minimum of three dealers, or all dealers if there are fewer than three.
Firm Quote Rule -- This rule prohibits broker/dealers from making an offer to buy or sell any security at a stated price unless the broker/dealer is prepared to purchase or sell at such price and under such conditions as are specified at the time of the offer. Pursuant to this, every broker/dealer has an obligation to identify accurately the nature of its quotations when they are provided to others and ensure that it is sufficiently staffed to be able to respond to inquiries during their normal business hours.
If you believe that you have been defrauded by an OTC Bulletin Board issuer, you may file a complaint with your State Securities Regulator or contact the SEC's Office of Investor Education and Assistance. If you believe that you have been defrauded by a broker, securities firm, investment advisor, or other securities professional, you may choose to file a customer complaint or a regulatory tip with NASD Regulation.
An Important Note About OTCBB Transactions
While The Nasdaq Stock Market is fully automated with multiple automatic execution and order delivery systems, such as SOES and SelectNet, OTCBB transactions are conducted almost entirely manually.
Because there are no automated systems for negotiating trades on the OTCBB, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders.
Investors should be particularly aware of this situation when placing market orders -i.e, an order to buy or sell a specific number of shares at the current market price. It is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting an execution. When this happens, an investor's order may be filled at a price that is much different than he or she expected.
Sources: www.nasdaq.com
NASDAQ: Ticker Symbols
All Nasdaq stocks maintain a four-letter ticker symbol. However, a few display a fifth letter. The list below summarizes the meanings of the fifth letter.
A .. Class A shares
B .. Class B shares
C .. Exempt from Nasdaq listing requirements for a limited period of time
D .. A new issue of an existing stock (often the result of a reverse split)
E .. Delinquent in required filings with the SEC as determined by the NASD
F .. Foreign-based company
G .. First convertible bond
H .. Second convertible bond, same company
I .. Third convertible bond, same company
J .. Voting shares
K .. Non-voting shares
L .. Miscellaneous situations, such as foreign preferred, preferred when-issued, a second class of units, a third class of warrants, or a sixth class of preferred stock
M .. Fourth preferred, same company
N .. Third preferred, same company
O .. Second preferred, same company
P .. First preferred
Q .. In bankruptcy proceedings
R .. Rights
S .. Shares of beneficial interest
T .. With warrants or with rights
U .. Units
V .. When-issued or with rights
W .. Warrants
X .. Mutual fund
Y .. ADR (American Depositary Receipts
Z .. Miscellaneous situations, such as a second class of warrants, a fifth class of preferred stock, a stub, a foreign preferred when-issued, or any unit or receipt or certificate representing a limited partnership interest.
