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.

The SEC finally approved the operation of the OTCBB on a permanent basis in April 1998. Since that time the requirement is responsible for making the OTCBB a more accepted legitimate exchange for trading low-priced securities.

The Penny Stock Reform Act of 1990 was an attempt to curb fraudulent security issues by placing severe restrictions on initial public offerings (IPOs) that were priced less than $5. Though this act helped to lower the quantity of IPOs priced less than $5, it failed to have a significant impact on the quality of issuers. Even after the act a large number of companies continued to face de-listing risk.