The OTC Bulletin Board (OTCBB) is a regulated quotation service that displays real time quotes, last-sale prices and volume information on OTC equity securities. The OTCBB provides access to more than 3,300 securities and includes more than 230 participating market makers.

There is one primary difference between penny stocks quoted on the Pink Sheets and those quoted on the OTC Bulletin Board. All OTCBB listed companies are required to file their updated financial reports with the SEC. This is not required for stocks listed on the Pink Sheets. Any company that does not file timely reports is removed from the OTCBB. On failure to file the required document, the SEC adds a fifth letter “E” to the company’s ticker and the company is provided a 30-day period to file with the SEC. If the company fails to meet this, its ticker stands to be removed from the OTCBB and must re-apply for listing.

The Penny Stock Reform Act of 1990 required the SEC to establish an electronic system to facilitate the widespread publication of quotation and last-sale information in the OTC securities. The OTCBB was then set up in June 1990 on a pilot basis to provide transparency in the OTC equities market. Firms are now required to report all trades in the domestic OTC equities security through an Automated Confirmation Transaction Service (ACT) within 90 seconds of the transaction.

There is no single accepted definition of a penny stock. Some people refer to them as stocks that trade for less than $1, others set the cut off point at $3, while some deem a penny stock anything that trades below $5, so there are a variety of opinions as to what share price determines the penny stock. However, the Securities Exchange Commission (SEC) has defined penny stocks as low price stocks of small companies generally trading under $5. While penny stocks generally trade “over the counter,” they can also trade on U.S. securities exchanges such as the NYSE, AMEX or NASDAQ. Many can also trade on foreign exchanges such as Canada and Germany.