OTC stands for Over-The-Counter trading. The OTC market is a set of decentralized markets which are less transparent and are subject to fewer regulations.
Trades are often done directly by the two participants without publicly disclosing the exact details of the trade. In the US, registered broker-dealers act as market maker using inter-dealer quotation services such as OTC Link (a service offered by OTC Markets Group) and the OTC Bulletin Board (OTCBB, operated by FINRA).
Many financial instruments are traded on OTC markets, including national, regional, or foreign equity issues; warrants, units, American Depository Receipts (ADRs), and Direct Participation Programs (DPPs).
Although stocks quoted on OTCBB must comply with SEC reporting requirement, other OTC stocks have limited or no disclosure requirements.
OTC Link has three sub-segments, in order of descending regulatory filing requirement: OTCQB, OTCQX, and OTC Pink. Securities not listed on exchanges or quoted on OTC markets or OTCBB are considered to be on the Grey Market.
Currency: US Dollar (USD)
Trading OTC-quoted symbols is similar to trading symbols listed on exchanges.
Note: not all order types are available for every gateway.
- Limit-on-Close (LOC) & Limit-on-Open (LOO) Buy/Sell→ShortSell
- Market-on-Close (MOC) & Market-on-Open (MOO) Buy/Sell→ShortSell
Basic Market Rules
- Lot Size: 1 share.
- Tick Size: same as the exchange where the stock is listed.
- Short Sale Rules: short selling is allowed.
- Circuit Breakers: trading on OTC equities may be halted by FINRA as described on the 6440. Trading and Quotation Halt in OTC Equity Securities rule page.
For more information, see the Market 101 – Trading page.
DTTW’s Fee Changes
Canadian F Shares on OTC
Effective Friday, August 14, 2020, traders can enjoy enhanced liquidity with new fees when trading Canadian F shares on OTC (PPro8 gateway: LINK).
These are Canadian interlisted securities with five-letter tickers ending with the letter F, and with the following fees:
|LINK||P||LINX Canadian F over 1 dollar||0.003|
|LINK||P||LINX Canadian F between 0.01 and 1 dollar||0.00003|
|LINK||P||LINX Canadian F less than 0.01 dollar||30 BP|
Traders can filter Canadian F symbols on the OTC Stock Screener page by selecting Foreign Ordinary Shares under Security Types and Canada under Country. Click here for a PDF with more information about OTC F shares.
April 1, 2020
New promotional rate – $.0021 rebate per share executed above $1.00 on OTCX (Destination: LINK)
Starting Wednesday, April 1, 2020, and continuing on until the end of June, OTC Link is offering a new fee structure at a promotional rate exclusively for DTTW™ traders.
OTCX provides access to greater liquidity, auto-ex functionality (80% of non-internalized activity), and is fully anonymous for trading over-the-counter securities.
Fee Schedule Above $1.00:
- Add Rebate $0.0021 per share
- Remove Fee $0.0034 per share
- Route Away Fee $0.004 per share
Active Over-the-Counter Symbols: TCEHY.PK, GBTC.PK, FNMA.PK, FMCC.PK, RHHBY.PK, NTDOY.PK, EADSY.PK
Available Order Types: Limit, Midpoint, Reserve, Hidden, Peg
|Market||Gateway||Liquidity Flags||Description||Current Fee||New Fee|
|OTC Pink||LINK||A||Adding liquidity on overdollar symbols||-0.0021||-0.0025|
|OTC Pink||LINK||L or X||Routed overdollar symbols||0.00385||0.004|
And watch for their daily OTC Link reports, only on TIP!
March 1, 2018
Please be advised that effective Thursday, March 1, 2018, the OTC LINK gateway introduced a fee for a new liquidity flag, as follows:
|Liquidity Flags||Over Dollar Fee||Below Dollar Fee|
OTC LINK Route
Away Fee Update
In Addition, We have been working with our execution provider to enable the OTC LINK gateway to route away when crossing another lit venue.
OTC LINK now becomes the less expensive alternative for aggressive orders routing away.
|Route Away Fee Comparison|
|Fee Description||OTC LINK Fees||ARCE Fees||DBOT Fees|
|Route away >=$1||0.00385||0.0045||0.0049|
|Route away <$1||0.00055||0.00058||0.00098|
OTC Market Price Changes
Effective Wednesday, January 1, 2020, the OTC entitlements prices will change as follows:
|Current Entitlements||New Entitlements (Effective January 1, 2020)|
|Description||Data Provided||Price||Description||Data Provided||Price|
|OTC L1||Consolidated L1 and TOS for OTC Pink Sheets||$35 USD||OTC L1||Consolidated L1 and TOS for OTC Pink Sheets||$40 USD|
|OTC L2||Consolidated L2 for OTC Pink Sheets||$45 USD||OTC L2||Consolidated L2 for OTC Pink Sheets||$50 USD|
OTC Markets offered by Day Trade The World™
We have added new venues and routing options that allow for greater access to liquidity at very competitive rates, updated our TOS data, and decreased the entitlement package for this market.
There is an opportunity to trade high volume/liquid names you are familiar with that list at the OTC as ADRs, including the following:
- RHHBY.PK → ROG.CH Roche Holding Ltd
- HEINY.PK → HEIN.AS Heineken
- ACBFF.PK → ACB.TO Aurora Cannabis
- TCEHY.PK → 0700.HK Tencent Holdings
We encourage users to use this new gateway “DBOT” on the OTC markets and take advantage of it’s great fill rates and low gateway fees.
DBOT is a fully automated, auto-execution Alternative Trading System (ATS) that provides an electronic platform for trading Over-the-Counter (OTC) equity securities.
The below destinations are available for this gateway:
- DBOT ATS – Direct access to DBOT, no routing away.
- DBOT SOR – Ping electronic MM’s prior to routing to DBOT as book only, ping Global OTC, and then post at DBOT
- Post GlobalOTC – Direct access to GlobalOTC (ARCE), no routing away
- GlobalOTC SOR – Ping electronic MM’s prior to routing to Global OTC as book only, ping DBOT, and then post at Global OTC
- HighTouch MM – Ping High Touch OTC MM (non-electronic) and wait for execution
- OTC SOR1 – Ping electronic MM’s prior to routing to DBOT and Global OTC as book only, and then spray the balance out to DBOT and Global OTC
- OTC SOR2 – Ping electronic MM’s prior to routing to OTC Markets as book only, ping Global OTC and DBOT, then post at OTC Market
This gateway charges a flat fee of 0.0004 per share per trade.
Effective Friday, February 26, 2021, and going forward, we will only reprice potentially incorrect internal matches when they are two cents or more away from the BBO on the OTC markets.
This is due to the nature of the OTC markets, where the lack of NBBO protection can cause orders to match outside the BBO/Level1.
Please take this change into account when trading on the OTC and inform your traders so they are aware as well.