Updated SEC rules for over-the-counter securities

New rules will affect your ability to buy and sell “Pink No Information” securities, including at Firstrade

On Tuesday, September 28, 2021, new amendments to Rule 15c2-11 under the Securities Exchange Act of 1934 go into effect that will impact the market for certain over-the-counter (OTC) securities classified as Pink No Information, Grey Market, and Expert Market OTC securities (collectively, “Impacted OTC Securities”). These amendments restrict the ability of broker-dealers to publish quotations for those companies that have not made required current financial and company information available to regulators and investors. The amendments also restrict the ability of retail investors to open new positions in Impacted OTC Securities.

What these rule changes mean to you

Starting Wednesday September 15, 2021, Firstrade customers will no longer be able to buy Impacted OTC Securities through Firstrade. We will restrict new buy orders in Impacted OTC Securities prior to the regulatory enforcement date, as it may become more difficult to liquidate such securities after the compliance deadline.

While Firstrade will accept closing orders to liquidate positions in these securities after the amendment goes into effect on September 28, 2021, it may be more difficult to sell these securities, as quoting and market liquidity may be very limited. The following restrictions will apply to any closing order for Impacted OTC Securities:

  • You must not be an Affiliate, Insider, or Control Person of the company

  • Only limit orders will be accepted
  • Quotes for the security may not be available

Other restrictions related to the purchase and sale of these securities may also apply.

Why is the SEC amending Rule 15c2-11?

The SEC indicated that the lack of current and/or publicly available information of the issuers of Impacted OTC Securities may disadvantage investors.  As a result, the SEC is restricting the ability to display quotations of Impacted OTC Securities.

Where can I find the list of Impacted OTC Securities?

The list of impacted OTC Securities can change daily; therefore, the best source of an accurate list is the “Stock Screener” tool available on the OTC Markets Group website: https://www.otcmarkets.com/research/stock-screener (Go to Stock Screener > Markets from PINKS drop down menu, select Pink Limited, and then select Expert Market)

Where can I find additional information related to 15c2-11?

Understand the SEC amendments for OTC securities

Learn more about quotations for OTC securities

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