FINRA Proposes Amendments Relating to Quotation Requirements for Unlisted Equity Securities and OTC Bulletin Board Service

FINRA proposed a rule change to delete the FINRA Rule 6500 Series, which governs the operation of the OTC Bulletin Board ("OTCBB") service, and cease operation of the OTCBB. FINRA would continue to centralize last-sale transaction reporting through the FINRA OTC Reporting Facility ("ORF") and, therefore, continue to operate a system that collects and disseminates transaction information on, and provides the widespread dissemination of reliable and accurate last-sale information with respect to, OTC equity securities, including penny stocks.

In place of operating the OTCBB, FINRA would instead promulgate rules relating to any inter-dealer quotation for OTC equity securities, including an alternative trading system ("ATS"). Under the FINRA Rules, such a quotation system would be required to (1) adopt and provide written policies and procedures relating to the collection and dissemination of quotation information in OTC equity securities, (2) establish and provide fair and nondiscriminatory written standards for granting access to quoting and trading on its system, and (3) provide for regulatory purposes a written description of each quotation-related data product offered by such member inter-dealer quotation system and related pricing information, including fees, rebates, discounts and cross-product pricing incentives.

Additionally, FINRA would impose additional requirements on quotation systems and broker-dealers that post quotes on OTC equity securities on an interdealer quotation system, including an ATS. FINRA is proposing minor amendments to the items of information required to be recorded and reported under the rule. The new rule would require the following items of quotation information: (1) Market Participant Symbol ("MPID") of quoting member; (2) inter-dealer quotation system; (3) date of quotation; and (4) time quotation displayed, expressed in hours, minutes, seconds and milliseconds, if the reporting member's system captures time in milliseconds.

See: Text of the Proposed Rule.