What Is the OTCQB?The OTCQB, also called "The Venture Market,"...

What Is the OTCQB?

The OTCQB, also called "The Venture Market," is the middle tier of the over-the-counter (OTC) market for U.S. stocks. It was created in 2010 and consists mainly of early-stage and developing U.S. and international companies that are not yet able to qualify for the OTCQX but are not as speculative as the lowest-tier Pink Sheets.1

KEY TAKEAWAYS

• The OTCQB is the mid-tier OTC equity market, which lists primarily early-stage and developing companies in the U.S. and international markets.
• OTCQB companies must meet certain minimum reporting standards, pass a bid test, and undergo annual verification.
• The other OTC tiers are the highest quality OTCQX, and the most speculative Pink Sheets.

Understanding the OTCQB

The over-the-counter or OTC market is a decentralized market where securities not listed on major exchanges are traded directly by a network of dealers. Instead of providing an order matchmaking service like the NYSE, these dealers carry inventories of securities in order to facilitate any buy and sell orders.

The OTCQB marketplace is run through OTC Link, an inter-dealer quotation and trading system developed by OTC Markets Group. OTC Link is registered with the Securities and Exchange Commission (SEC) as a broker-dealer and also as an alternative trading system (ATS).4

OTC Markets Group Inc. "OTC Link ATS: Overview."

OTC Link enables broker-dealers to not only post and disseminate their quotes, but also negotiate trades through the system’s electronic messaging capability.5 This feature enabled it to effectively replace FINRA’s OTCBB, which was a quotation-only system.