New OTC Market regulations

Within the OTC Markets Group monthly newsletter, there is an interesting announcement on OTC Market Regulation & Compliance.

FINRA Rule 6433 On August 5, 2012 FINRA announced that the SEC-approved amendments to FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) will become effective on November 5, 2012. This has been approved as a 1 year pilot period. The new quotation sizes are as follows: Price (Bid or Offer) Minimum Quote Size (# of Shares) $0.0001 to $0.0999 10,000 $0.10 to $0.1999 5,000 $0.20 to $0.5099 2,500 $0.51 to $0.9999 1,000 $1.00 to $174.99 100 $175.00+ 1 For full details of this announcement, please see: FINRA Regulatory Notice 12-37.

So what does this mean to the average investor?  Well, if there is a penny stock out there, the minimum order you can place is 10,000 shares, which equates to $1.00.  Would anyone ever place a market order for $1?  Not a retail buyer since a retail buyer’s stock trade fee wold be at $10 (Schwab or Ameritrade) and then there are market fees of probably $2 on top of that.  On the market maker side though, you would see trades as small as this because their fees are much smaller.

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© 2012 by Rhodes Holdings LLC, all rights reserved except excerpts from the FINRA notice.

 

Securities in America, what’s changing

stock market (Photo credit: 401K)

Every since the Jump-start Our Businesses Start-ups, or JOBS Act, was signed into law this last week, there have been a number of items of interest coming out in the press.

Community Banks and Second Markets Holdings Inc.

The article just released today in the Houston Business Journal entitled, “A stock market for Houston, other community banks?” brought out some great points, but missed the biggest one – this is not a new issue.  The federal government enacted laws, and continues to enact laws and taxes, that severely hamper the transfer of shares, restricted or otherwise.

SecondMarkets.com provides a great service – Rhodes Holdings LLC and its parent are members of their service.  Recently they were in the news since many Facebook shares were traded over their service, or more properly, in their market.  We got involved with their market as they were liquidating many of the mortgage and bond packages caused by the 2007 – 2008 financial melt down.

Now that the JOBS Act will introduce a whole new set of investors to investing in start-ups with a plan and gumption enough to take advantage of the markets / PPM portals that will inevitably pop up, Second Markets stands out as a top end portal.

Related articles

• Eased IPO laws prompt memories of dot-com bubble (theglobeandmail.com)
• Economic trouble for Obama? (news.salon.com)

 

OTC Markets newsletter a treasure trove

Each month, OTC Markets puts out a newsletter that always holds some unique treasure for issuers, their management team, and investors in general.  This month’s is no different.  Take some time and read the April 2012 OTC Markets’ Newsletter.

Related articles

• February 2012 OTC Markets Newsletter

 

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© 2012 by Rhodes Holdings, Inc., all rights reserved.