FINRA proposed rules changes that would (i) shut down the OTC Bulletin Board Service ("OTCBB"), (ii) delete all related rules, and (iii) establish new requirements for alternative systems run by individual broker-dealers that disseminate identified broker-dealer quotations in OTC Equity Securities (as defined under FINRA Rule 6420(f)) (a/k/a "inter-dealer quotation systems").
FINRA's filing suggests that the OTCBB system is technologically outdated and quotation activity on the platform is "nonexistent." It has been effectively replaced by technology run by individual member firms. Accordingly, FINRA has proposed shutting down the system and implementing a new rule that would govern the member inter-dealer quotation systems run by various broker-dealers.
The new requirements would mandate that member inter-dealer quotation systems:
- create and conspicuously disclose to subscribers their (i) written policies and procedures pertaining to the collection and distribution of quotation information, and (ii) non-discriminatory written criteria for authorizing quoting and trading on their systems;
- establish written policies and procedures that address complaints by subscribers regarding the display of quotes and monthly reports to FINRA that include order and response information;
- offer customers a written description of the order- or quotation-related data products that they offer and related pricing information; and
- provide information regarding the integrity of their systems.
Comments on the proposal (which has yet to be published by the SEC) must be submitted 21 days within its publication in the Federal Register.
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