Can someone direct me to some resources that will explain what PINK means? I understand (vaguely) that OTC list stocks that are not bound to any particular market, but i'm sketchy on this as well. Any info available?
The Pink Sheets are a system for quoting prices for unlisted and unregistered securities in the US. Trading takes place between brokers in an over-the-counter (OTC) format. Don't be confused by the terminology. OTC refers to the manner in which trading takes place, i.e., between brokers rather than through a single auction market. (Officially NASDAQ is an OTC-style market; however, since a lot of trading takes place over the NASDAQ Electronic Communication Network, it is sort of a hybrid system.)
As I previously alluded, companies that "trade on the Pink Sheets" are not registered with the SEC. There are basically two types of companies that trade in this way: viable companies (including major international firms) that choose not to register with the SEC because of the onerous regulatory requirements, and potentially non-viable, unregistered companies that do not meet the listing requirements of a more reputable trading venue. The Pink Sheets have a reputation for being a haven for disreputable penny stock pump and dump schemes. Price information may be updated infrequently. Finding information on Pink Sheet traded companies can be difficult or impossible because of the lack of registration.
The next step up from the Pink Sheets in the hierarchy of US trading venues is typically considered to be the "OTCBB". Typically companies in this venue are SEC-registrants that do not meet the listing requirements of a larger exchange. Companies listed here tend to be in the microcap segment, and more rarely, companies delisted from other exchanges.
Essentially, the only requirement for listing on the OTCBB is being SEC-registered. The Pink Sheets have basically no requirements. In both the venues, trading tends to be infrequent and in low volumes. Buyer beware.
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