What are the Three Tiers of the OTC Exchange?
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- OTCQX is the highest tier of the OTC. Companies that trade on the OTCQX meet certain financial metrics, can prove that they are in compliance with U.S Securities laws, provide disclosures, and are sponsored by a professional, independent third party.
- OTCQB has less stringent requirements than the OTCQX tier. Companies that trade on the OTCQB are developmental companies. On May 1, 2014, the OTCQB implemented a one-penny bid price requirement ($0.01) to improve the quality of the tier. To qualify for the OTCQB tier, the CEO or CFO must certify that the reported information is current and accurate and are required to go through an annual verification and certification process. Companies that fall under this tier tend to vary in strength because there are no minimum financial standards.
- OTCPK (OTC Pink) is the lowest tier on the OTC exchange. These companies typically provide limited or no financial reporting information to the SEC. Technical420 does not recommend investing in companies that trade on the OTCPK due to the lack of information provided. Companies that trade on the OTCPK are considered to be beyond speculative. When an OTCPK listed company becomes current with the SEC, they may qualify for the OTCQB if they also satisfy the one-penny bid requirement. There are only a few companies that trade on the OTCPK and are current with their SEC disclosures.