otcbb: ==> Umstellung auf BBX in 2003, Konsequenzen? - 500 Beiträge pro Seite
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Meistdiskutierte Wertpapiere
Platz | vorher | Wertpapier | Kurs | Perf. % | Anzahl | ||
---|---|---|---|---|---|---|---|
1. | 1. | 18.804,32 | +0,45 | 211 | |||
2. | 3. | 0,2250 | +7,14 | 108 | |||
3. | 2. | 0,3120 | +0,65 | 95 | |||
4. | 4. | 160,96 | +0,50 | 78 | |||
5. | 5. | 2,5640 | -0,06 | 61 | |||
6. | 7. | 6,8000 | +2,38 | 43 | |||
7. | 10. | 2.377,12 | +1,32 | 43 | |||
8. | 6. | 0,1651 | -0,60 | 39 |
Wer weiß näheres über die geplante Einführung der BBX
im nächsten Jahr?
.....und vor allem über die Konsequenz für die jetzigen
OTCBB-Werte?
SM
im nächsten Jahr?
.....und vor allem über die Konsequenz für die jetzigen
OTCBB-Werte?
SM
keine konsequenzen, jedoch nicht jedes unternehmen wird automatisch einbezogen - qualität ist nun im zockermarkt gefragt.
sinn der sache ist jedoch auch hier durch überfällige regularien qulalität zu erbringen und chancengleichheit. verordnungen sind ähnlich der nasdaq, jedoch werden erleichterungen in der kursgebung, kapitalisierung ( im sinne der 1 usd regel zb. ) gemacht, wichtig aber auch hier ist die bilanzierung und der wegfall von sogenannten announcements.
ganz grob umschrieben....., aber gehe doch auf die otc seite und informiere dich, auch über die firmen die diese qualitätskriterien bereits erbringen.
sinn der sache ist jedoch auch hier durch überfällige regularien qulalität zu erbringen und chancengleichheit. verordnungen sind ähnlich der nasdaq, jedoch werden erleichterungen in der kursgebung, kapitalisierung ( im sinne der 1 usd regel zb. ) gemacht, wichtig aber auch hier ist die bilanzierung und der wegfall von sogenannten announcements.
ganz grob umschrieben....., aber gehe doch auf die otc seite und informiere dich, auch über die firmen die diese qualitätskriterien bereits erbringen.
@LINZY38
Unter welchem Link = WWW:
findet man diese provisorische Liste ???????
Danke im vorraus
JS200
Unter welchem Link = WWW:
findet man diese provisorische Liste ???????
Danke im vorraus
JS200
Hi,
hier findest du alle Informationen über BBX (Bulletin Board Exchange) .
HTTP://www.bbxchange.com/
Grüße,
Brummbär
hier findest du alle Informationen über BBX (Bulletin Board Exchange) .
HTTP://www.bbxchange.com/
Grüße,
Brummbär
@ js
bis jetzt kann man sich noch nichteinmal für die BBX anmelden.
ne liste gibt´s deshalb noch nicht.
bis jetzt kann man sich noch nichteinmal für die BBX anmelden.
ne liste gibt´s deshalb noch nicht.
Aus OTCBB wird BBX
2003 wird in den USA ein neues Börsensegment eröffnet, die Bulletin Board Exchange (BBX). Die BBX wird den Platz des OTC Bulletin Board ® (OTCBB) einnehmen. Das OTCBB wird auslaufen. Die BBX wendet sich an viele der Unternehmen, die zurzeit am OTCBB notieren, allerdings wird die Qualität des Marktes höher sein.
Die BBX wird qualitative Listingkriterien, aber keine minimalen Aktienkurs-, Einkommens- oder Vermögensvoraussetzungen haben. Zusätzlich wird die BBX über ein elektronisches Handelssystem verfügen, um die Verhandlung von Ordern und automatische Ausführung zu erlauben. Dies ist eine große Verbesserung gegenüber dem momentanen System am OTCBB, wo Marktteilnehmer die Order ihrer Kunden telefonisch ausführen müssen. Das neue System der BBX wird die Geschwindigkeit und Vertrauenswürdigkeit der Orderausführungen sowie die gesamte Transparenz des Marktplatzes erhöhen. Die Einführung der BBX ist für das erste Quartal 2003 geplant, abhängig von der Genehmigung durch die Securities and Exchange Commission (SEC). Um den am OTCBB notierenden Unternehmen einen sanften Übergang zu einer marktgerechten Umgebung zu ermöglichen, wird die Nasdaq das OTCBB in den ersten sechs Monaten nach Einführung der BBX weiter betreiben. Wenn ein OTCBB-Emittent sich entscheidet, nicht an der BBX oder einer anderen US-amerikanischen Wertpapierbörse notiert zu warden, können die Aktien dieses Unternehmens trotzdem durch informelle over-the-counter Methoden gehandelt warden. Zum Beispiel können die Börsenmakler ihre Preisnotierungen für die betreffende Aktie in die PinkSheets verlegen.
Die Unternehmen können sich ab Juli 2002 für die BBX bewerben. Nach Erhalt werden die Bewerbungen einem Analysten zugeteilt, der eine verständliche Überprüfung durchführt, um Einverständnis mit den Notierungsregeln und –voraussetzungen der BBX zu erzielen. Genehmigte Bewerber werden eine Notierungsvereinbarung mit der BBX vor Beginn des Handels unterzeichen müssen.
Die Voraussetzungen für eine Notierung an der BBX umfassen:
• Öffentliche Interessenstandards, die mit denen des Nasdaq National Market (NNM) und SmallCap Market identisch sind und die die BBX mit der Diskretion ausstattet, einen Emittenten zum Zweck des Anlegerschutzes und der Marktintegrität abzulehnen oder vom Handel zu auszuschließen;
• Die Voraussetzung von mindestens 100 verschiedenen Aktionären und 200.000 Aktien im öffentlichen Umlauf und
• Gesetzliche Standards entsprechend des NNM und SmallCap Marktes mit einer Anpassung an die Voraussetzungen des unabhängigen Führungs- und Überwachungskomitees, um die Schwierigkeiten frühzeitig zu erkennen, die Kleinunternehmen bei der Erfüllung dieser Voraussetzungen haben könnten.
Mehr Info unter www.bbxchange.com
Grüße,
Brummbär
@LOSS_PRO und BRUMMBÄR
Danke für die INFO
JS200
Danke für die INFO
JS200
hier noch drei artikel von realist..., sorry, bashern und shortsellern:
BBX – A BETTER BULLETIN BOARD?
June 11, 2002
The OTC Bulletin Board has afforded companies an air of legitimacy that they have not always deserved. Some
have used that listing to imply a relationship with the NASD (as in, “we are now listed on the NASD Bulletin
Board,” while others have gone a step further and, inaccurately, claimed to be listed on the Nasdaq Bulletin Board.
Of course, the OTC Bulletin Board is not part of Nasdaq and its listing standards are minimal. Companies need
only file regular reports with the Securities and Exchange Commission. Unlike Nasdaq listed companies, they do
not have to meet any minimal financial thresholds or pass a “public interest” test. Some of that is about to change.
A year from now the OTC Bulletin Board is likely to be nothing more than a memory. Plans call for it to be phased
out, beginning in early 2003, to be replaced by a new trading venue, the Bulletin Board Exchange (BBX). The BBX
will facilitate trading; an electronic trading system will allow order negotiation and execution. That marks a dramatic
departure from the OTC Bulletin Board, where orders are placed by telephone.
Many of the current OTC Bulletin Board companies will be listed on the BBX, but a large number are likely to be
excluded. The BBX will not require companies to maintain a minimum share price, income or assets, but it will
impose qualitative listing standards as a firewall against possible scams and abuses.
What will happen to those companies that do not meet the new BBX standards? Most of them are likely to wind up
trading on the Pink Sheets, a privately-owned stock quotation service that already provides price information for
over-the-counter securities that are not listed on any national securities exchange, or on the OTC Bulletin Board.
(See In The Pink). Since the Pink Sheets are privately owned, they do not enjoy the same degree of regulatory
oversight as the trading systems run by Nasdaq and the NASD.
Exiling companies to the Pink Sheets could have negative repercussions for investors. Some of those companies
currently file regular financial reports with the SEC solely so that they can retain their OTC Bulletin Board listing.
Companies banished to the Pink Sheets may stop filing those reports, making it that much harder for investors to
obtain credible information.
Despite such concerns, the BBX promises a higher standard of information, and a greater level of shareholder
protection. First, however, the new qualitative standards must gain final approval from the SEC. If they do, the
BBX will incorporate some key elements of the Nasdaq listing process. Here is a look at the proposed
requirements:
Public Interest Standard
The BBX would utilize the public interest standard now imposed by the Nasdaq National Market and
the Nasdaq SmallCap Market. That means the BBX will have discretion to deny listing, or delist a
company, to protect the public interest. According to the BBX, imposition of this standard will involve
a review of directors, officers, and major shareholders for past legal or regulatory issues.
This rule could have a major impact on many of the reverse-mergers that have been in vogue for OTC
Bulletin Board companies. Private companies often use reverse-mergers to become public without
having to go through SEC scrutiny. Now the BBX will be looking at the background of the officers
and directors of the newly merged company. If those individuals do not meet the “public interest”
criteria, the company could lose its BBX listing. (See The Shell Game).
That might be good news for regulators, and future investors, but it could prove costly to public
investors who bought shares in the BBX company prior to the reverse-merger, and now find
themselves holding stock in a delisted company.
This broad standard affords overwhelming discretion to the BBX, which will be invested with the
power to determine the public interest. It is unclear at this time whether companies will have an
opportunity to appeal from that determination, or what form that appeal might take.
Public Float/Shareholder Requirement
Companies will be required to demonstrate a minimum of 100 round-lot (at least one hundred shares)
shareholders and a public float of at least 200,000 shares. This requirement is intended to assure a
minimal level of public ownership, and would help to prevent a handful of insiders or promoters from
using a BBX listing to dump shares of a thinly-held stock.
Corporate Governance Standards
BBX companies would be required to hold annual shareholder meetings and to solicit proxies in
advance of those meetings. This requirement would be consistent with existing Nasdaq standards, as
well as SEC regulations and most state corporate laws.
A company will be required to hold an annual meeting within twelve months of the end of the first year
after being listed on the BBX. The BBX also is proposing to adopt the Nasdaq standard requiring a
quorum of at least one-third of the shareholders at the meeting.
Independent Directors
BBX companies must have at least one independent director. An independent director may not be an
officer, director, employee or shareholder of the company. Companies will be given a grace period of
one year from initial BBX listing to appoint that independent director.
Audit Committee/Conflicts of Interest
Listed companies will be required to establish an audit committee, a majority of which may not consist
of non-independent directors. The Audit Committee would review all related party transactions.
Companies would have a twelve month period to create the Audit Committee.
Voting Rights
This is a key provision. The BBX would adopt the Nasdaq rule prohibiting a listed company from
disenfranchising existing shareholders. This would prevent companies from issuing a class of
super-voting stock that might enable management and its associates from controlling the destiny of the
company to the exclusion of the public shareholders. When considered together with several of the
other proposed changes, this rule is likely to make it far more difficult for a small group of insiders to
give themselves stock, change the company’s business plan, or turn over control through
reverse-mergers.
Auditor Peer Review
All issuers would be required to utilize auditors who are subject to peer review consistent with the
American Institute of Certified Public Accountants procedures.
Shareholder Approval
This represents a major change for most OTC Bulletin Board companies, and a major benefit to
public investors. Shareholder approval will be required for all transactions that involve the grant of
stock options to officers and directors; acquisitions; or changes of control. Insiders will continue to
steer companies toward acquisitions and reverse-mergers that result in a change of control, but now
they will need to get stockholder approval. And, as we already have seen, they will not be able to
manipulate that approval by granting themselves shares of super-voting stock.
Distribution of Annual Reports
BBX-listed companies will be required to distribute annual reports and to make quarterly reports
available on request.
As they have been proposed, these new rules are calculated to prevent a small group of insiders from controlling,
and manipulating, listed companies to the detriment of public investors. They also would assure that investors
receive timely, accurate, and credible financial information.
Will they work? Are companies more likely to give up reverse-mergers and dubious acquisitions just because
shareholder approval will be required? Or will they just move more carefully and deliberately? Experience suggests
that just when one door closes on stock manipulators, they manage to find another door, or a window, or a vent.
But the BBX addresses many of the major devices now being employed to manipulate companies and their stock.
It’s a good step.
BBX – TRADING RULES
June 20, 2002
On June 11th we looked at the proposed listing standards for the Bulletin Board Exchange (BBX), the trading
market that is slated to replace the OTC Bulletin Board in 2003. (See BBX – A Better Bulletin Board?). As we
saw, the BBX will impose new, more stringent listing requirements for former OTC Bulletin Board companies,
including a public interest standard. But that will not be the only major change. The BBX also plans to establish a
new trading environment, more akin to that utilized by Nasdaq.
The new trading rules will be a hybrid of existing OTC Bulletin Board regulations, and Nasdaq practices. The
following is a brief summary of those rules:
1.Market makers on the BBX will be required to maintain continuous, two-sided markets, with quotes that are
reasonably related to the market and generally do not lock or cross the market.
What does this mean? In a two-sided market, market makers must quote both a bid and ask price for each
security in which they make a market and to execute orders at those prices.
A locked market occurs when the inside bid price equals the inside offer price in the same security, and a
crossed market occurs when the inside bid is greater than the inside offer price of a security.
2.BBX market makers will be required to report their short interest on a monthly basis. Nasdaq market
makers already must comply with this requirement. Short interest represents the total number of shares of a
security that have been sold short by customers and securities firms, and that have not been repurchased to
settle those short positions.
This way, investors in BBX companies will have an idea of how vigorously a BBX company is being shorted
in any given month. That should help alleviate concerns that have dogged some OTC Bulletin Board
companies. Disgruntled investors (and sometimes management) occasionally claim that large, undisclosed
short positions have depressed the stock of OTC Bulletin Board companies. On several occasions, there
have been claims that the short positions were established improperly – through so-called “naked shorting”
(which takes place when the short seller does not own the stock) – or that the short position vastly exceeds
the number of shares outstanding.
3.BBX stocks would be subject to the same trading halt rule that applies to Nasdaq SmallCap and National
Market stocks. That would afford the NASD authority to suspend trading in a BBX security while material
news from the issuer was being disseminated. Trading halts generally last 30 minutes and are intended to give
all investors an equal opportunity to evaluate news and make buy, sell, or hold decisions.
Under existing Nasdaq rules, trading halts can be extended if Nasdaq requests additional information from a
company, the company is not current in its filing requirements, or the company has not complied with listing
requirements. Presumably, the BBX will have discretion to impose similar standards.
4.BBX will retain certain OTC Bulletin Board rules. Market makers will be required to quote prices in a
designated minimum size, depending on the quoted price of the BBX issue.
5.In another holdover from the OTC Bulletin Board, a 100% maintenance margin requirement will be imposed
on BBX issues.
6.BBX companies will be required to comply with the SEC’s Penny Stock Rules, whenever a stock would
qualify as a “penny stock” absent BBX listing. This differs from Nasdaq securities, which gain an exemption
from the penny stock rules by virtue of their Nasdaq listing.
The term "penny stock" refers to low-priced (below $5), speculative securities, that are not traded on
national exchanges like Nasdaq, the New York Stock Exchange and the American Stock Exchange. Before
a broker can sell a penny stock, SEC rules require the brokerage firm to approve the customer for the
transaction and receive from the customer a written agreement to the transaction. In addition, the firm must
give the customer a document describing the risks of investing in penny stocks, tell the customer the current
market quotation, and disclose the compensation the firm and its broker will receive for the trade. The firm
also is required to send monthly account statements showing the market value of each penny stock in the
customer’s account.
If all goes according to plan, Nasdaq also will launch an automated delivery and negotiation system, as well as a
separate automatic execution system for the BBX. This would offer BBX traders speedy and efficient access to
quotes and markets.
NASD Regulation and Nasdaq plan to step up the enforcement and monitoring process, to assure compliance with
the new rules and thwart anti-competitive practices.
Stay tuned.
BBX ROAD SHOWS
September 30, 2002
The proposed new Bulletin Board Exchange (BBX) has been taking its show on the road. The BBX team has been
traveling around the United States (and Canada) to acquaint issuers, market makers and investors with the new
exchange that is scheduled to supplant the OTC Bulletin Board sometime next year. The Securities and Exchange
Commission still must give its stamp of approval, but the BBX seems ready to roll – application forms are already
printed and ready to mail once the SEC gives its okay.
The BBX will feature qualitative listing standards and an electronic trading system following the NASDAQ model.
Although BBX firms will not be required to maintain minimum shares prices, income or assets, the heightened listing
requirements are likely to impose an insurmountable barrier for many of the firms now trading on the OTC Bulletin
Board. (For a complete review of the proposed BBX listing requirements and trading rules, read BBX – A Better
Bulletin Board and BBX – Trading Rules).
In view of recent legislation and regulatory rulemaking, those rules should continue to evolve. For example, while
the BBX has proposed that each company’s audit committee must consist of a majority of independent directors,
the Sarbanes-Oxley Act of 2002 requires that all members of the audit committee be independent.
As a practical matter, what will this mean for investors? The public should benefit from enhanced disclosure
standards, real time surveillance, and corporate governance rules that require shareholder approval for significant
corporate transactions. Market makers will be required to maintain quotes on both sides of the market – the buy
and the sell.
Perhaps most important, the BBX will review the regulatory and legal history of officers, directors, promoters and
significant shareholders, and determine whether listing is in the public interest.
Still, investors will continue to have concerns. While market makers will be required to report their short position in
BBX stocks on a monthly basis, the BBX concedes that it cannot impose that same requirement on non-NASD
member firms. That means foreign broker-dealers - including those in Canada – may hold non-disclosed short
positions in BBX stocks.
And while the BBX will apply that public interest test to new listings, as a practical matter we wonder how the BBX
will be able to fully review the background of each officer, director and controlling shareholder of the initial wave of
applicants. As of August 2002 there were 3,753 companies listed on the OTC Bulletin Board. Assuming that only
half of those companies applied for BBX listing, how can the BBX possibly be expected to thoroughly investigate
each of the applicants? How many BBX Staff members will be assigned to that review? Are they expected to
conclude the initial reviews on any expedited timetable? It seems like an impossible task.
Investors will also be concerned with the fate of those OTC Bulletin Board companies that don’t make it to the
BBX. For the past several years, the OTC Bulletin Board has required listed companies to file periodic reports and
audited financial statements with the SEC. That means the public has been assured access to timely, material
information about those entities. Individual investors often rely upon that information, and its continued availability,
when choosing to invest in OTC Bulletin Board stocks.
Now, all of that could change. Once the OTC Bulletin Board disappears, the non-BBX companies will be relegated
to the Pink Sheets – a privately run trading system which has no listing requirements. That means the former OTC
Bulletin Board companies can choose to stop filing public reports – depriving investors of a valuable source of
information.
If you have questions or thoughts about the new BBX, you may wish to attend the BBX Forum in your area. A
complete list can be found at http://www.bbxchange.com/Forum_schedule/forum_schedule_index…
Stay tuned for more developments.
BBX – A BETTER BULLETIN BOARD?
June 11, 2002
The OTC Bulletin Board has afforded companies an air of legitimacy that they have not always deserved. Some
have used that listing to imply a relationship with the NASD (as in, “we are now listed on the NASD Bulletin
Board,” while others have gone a step further and, inaccurately, claimed to be listed on the Nasdaq Bulletin Board.
Of course, the OTC Bulletin Board is not part of Nasdaq and its listing standards are minimal. Companies need
only file regular reports with the Securities and Exchange Commission. Unlike Nasdaq listed companies, they do
not have to meet any minimal financial thresholds or pass a “public interest” test. Some of that is about to change.
A year from now the OTC Bulletin Board is likely to be nothing more than a memory. Plans call for it to be phased
out, beginning in early 2003, to be replaced by a new trading venue, the Bulletin Board Exchange (BBX). The BBX
will facilitate trading; an electronic trading system will allow order negotiation and execution. That marks a dramatic
departure from the OTC Bulletin Board, where orders are placed by telephone.
Many of the current OTC Bulletin Board companies will be listed on the BBX, but a large number are likely to be
excluded. The BBX will not require companies to maintain a minimum share price, income or assets, but it will
impose qualitative listing standards as a firewall against possible scams and abuses.
What will happen to those companies that do not meet the new BBX standards? Most of them are likely to wind up
trading on the Pink Sheets, a privately-owned stock quotation service that already provides price information for
over-the-counter securities that are not listed on any national securities exchange, or on the OTC Bulletin Board.
(See In The Pink). Since the Pink Sheets are privately owned, they do not enjoy the same degree of regulatory
oversight as the trading systems run by Nasdaq and the NASD.
Exiling companies to the Pink Sheets could have negative repercussions for investors. Some of those companies
currently file regular financial reports with the SEC solely so that they can retain their OTC Bulletin Board listing.
Companies banished to the Pink Sheets may stop filing those reports, making it that much harder for investors to
obtain credible information.
Despite such concerns, the BBX promises a higher standard of information, and a greater level of shareholder
protection. First, however, the new qualitative standards must gain final approval from the SEC. If they do, the
BBX will incorporate some key elements of the Nasdaq listing process. Here is a look at the proposed
requirements:
Public Interest Standard
The BBX would utilize the public interest standard now imposed by the Nasdaq National Market and
the Nasdaq SmallCap Market. That means the BBX will have discretion to deny listing, or delist a
company, to protect the public interest. According to the BBX, imposition of this standard will involve
a review of directors, officers, and major shareholders for past legal or regulatory issues.
This rule could have a major impact on many of the reverse-mergers that have been in vogue for OTC
Bulletin Board companies. Private companies often use reverse-mergers to become public without
having to go through SEC scrutiny. Now the BBX will be looking at the background of the officers
and directors of the newly merged company. If those individuals do not meet the “public interest”
criteria, the company could lose its BBX listing. (See The Shell Game).
That might be good news for regulators, and future investors, but it could prove costly to public
investors who bought shares in the BBX company prior to the reverse-merger, and now find
themselves holding stock in a delisted company.
This broad standard affords overwhelming discretion to the BBX, which will be invested with the
power to determine the public interest. It is unclear at this time whether companies will have an
opportunity to appeal from that determination, or what form that appeal might take.
Public Float/Shareholder Requirement
Companies will be required to demonstrate a minimum of 100 round-lot (at least one hundred shares)
shareholders and a public float of at least 200,000 shares. This requirement is intended to assure a
minimal level of public ownership, and would help to prevent a handful of insiders or promoters from
using a BBX listing to dump shares of a thinly-held stock.
Corporate Governance Standards
BBX companies would be required to hold annual shareholder meetings and to solicit proxies in
advance of those meetings. This requirement would be consistent with existing Nasdaq standards, as
well as SEC regulations and most state corporate laws.
A company will be required to hold an annual meeting within twelve months of the end of the first year
after being listed on the BBX. The BBX also is proposing to adopt the Nasdaq standard requiring a
quorum of at least one-third of the shareholders at the meeting.
Independent Directors
BBX companies must have at least one independent director. An independent director may not be an
officer, director, employee or shareholder of the company. Companies will be given a grace period of
one year from initial BBX listing to appoint that independent director.
Audit Committee/Conflicts of Interest
Listed companies will be required to establish an audit committee, a majority of which may not consist
of non-independent directors. The Audit Committee would review all related party transactions.
Companies would have a twelve month period to create the Audit Committee.
Voting Rights
This is a key provision. The BBX would adopt the Nasdaq rule prohibiting a listed company from
disenfranchising existing shareholders. This would prevent companies from issuing a class of
super-voting stock that might enable management and its associates from controlling the destiny of the
company to the exclusion of the public shareholders. When considered together with several of the
other proposed changes, this rule is likely to make it far more difficult for a small group of insiders to
give themselves stock, change the company’s business plan, or turn over control through
reverse-mergers.
Auditor Peer Review
All issuers would be required to utilize auditors who are subject to peer review consistent with the
American Institute of Certified Public Accountants procedures.
Shareholder Approval
This represents a major change for most OTC Bulletin Board companies, and a major benefit to
public investors. Shareholder approval will be required for all transactions that involve the grant of
stock options to officers and directors; acquisitions; or changes of control. Insiders will continue to
steer companies toward acquisitions and reverse-mergers that result in a change of control, but now
they will need to get stockholder approval. And, as we already have seen, they will not be able to
manipulate that approval by granting themselves shares of super-voting stock.
Distribution of Annual Reports
BBX-listed companies will be required to distribute annual reports and to make quarterly reports
available on request.
As they have been proposed, these new rules are calculated to prevent a small group of insiders from controlling,
and manipulating, listed companies to the detriment of public investors. They also would assure that investors
receive timely, accurate, and credible financial information.
Will they work? Are companies more likely to give up reverse-mergers and dubious acquisitions just because
shareholder approval will be required? Or will they just move more carefully and deliberately? Experience suggests
that just when one door closes on stock manipulators, they manage to find another door, or a window, or a vent.
But the BBX addresses many of the major devices now being employed to manipulate companies and their stock.
It’s a good step.
BBX – TRADING RULES
June 20, 2002
On June 11th we looked at the proposed listing standards for the Bulletin Board Exchange (BBX), the trading
market that is slated to replace the OTC Bulletin Board in 2003. (See BBX – A Better Bulletin Board?). As we
saw, the BBX will impose new, more stringent listing requirements for former OTC Bulletin Board companies,
including a public interest standard. But that will not be the only major change. The BBX also plans to establish a
new trading environment, more akin to that utilized by Nasdaq.
The new trading rules will be a hybrid of existing OTC Bulletin Board regulations, and Nasdaq practices. The
following is a brief summary of those rules:
1.Market makers on the BBX will be required to maintain continuous, two-sided markets, with quotes that are
reasonably related to the market and generally do not lock or cross the market.
What does this mean? In a two-sided market, market makers must quote both a bid and ask price for each
security in which they make a market and to execute orders at those prices.
A locked market occurs when the inside bid price equals the inside offer price in the same security, and a
crossed market occurs when the inside bid is greater than the inside offer price of a security.
2.BBX market makers will be required to report their short interest on a monthly basis. Nasdaq market
makers already must comply with this requirement. Short interest represents the total number of shares of a
security that have been sold short by customers and securities firms, and that have not been repurchased to
settle those short positions.
This way, investors in BBX companies will have an idea of how vigorously a BBX company is being shorted
in any given month. That should help alleviate concerns that have dogged some OTC Bulletin Board
companies. Disgruntled investors (and sometimes management) occasionally claim that large, undisclosed
short positions have depressed the stock of OTC Bulletin Board companies. On several occasions, there
have been claims that the short positions were established improperly – through so-called “naked shorting”
(which takes place when the short seller does not own the stock) – or that the short position vastly exceeds
the number of shares outstanding.
3.BBX stocks would be subject to the same trading halt rule that applies to Nasdaq SmallCap and National
Market stocks. That would afford the NASD authority to suspend trading in a BBX security while material
news from the issuer was being disseminated. Trading halts generally last 30 minutes and are intended to give
all investors an equal opportunity to evaluate news and make buy, sell, or hold decisions.
Under existing Nasdaq rules, trading halts can be extended if Nasdaq requests additional information from a
company, the company is not current in its filing requirements, or the company has not complied with listing
requirements. Presumably, the BBX will have discretion to impose similar standards.
4.BBX will retain certain OTC Bulletin Board rules. Market makers will be required to quote prices in a
designated minimum size, depending on the quoted price of the BBX issue.
5.In another holdover from the OTC Bulletin Board, a 100% maintenance margin requirement will be imposed
on BBX issues.
6.BBX companies will be required to comply with the SEC’s Penny Stock Rules, whenever a stock would
qualify as a “penny stock” absent BBX listing. This differs from Nasdaq securities, which gain an exemption
from the penny stock rules by virtue of their Nasdaq listing.
The term "penny stock" refers to low-priced (below $5), speculative securities, that are not traded on
national exchanges like Nasdaq, the New York Stock Exchange and the American Stock Exchange. Before
a broker can sell a penny stock, SEC rules require the brokerage firm to approve the customer for the
transaction and receive from the customer a written agreement to the transaction. In addition, the firm must
give the customer a document describing the risks of investing in penny stocks, tell the customer the current
market quotation, and disclose the compensation the firm and its broker will receive for the trade. The firm
also is required to send monthly account statements showing the market value of each penny stock in the
customer’s account.
If all goes according to plan, Nasdaq also will launch an automated delivery and negotiation system, as well as a
separate automatic execution system for the BBX. This would offer BBX traders speedy and efficient access to
quotes and markets.
NASD Regulation and Nasdaq plan to step up the enforcement and monitoring process, to assure compliance with
the new rules and thwart anti-competitive practices.
Stay tuned.
BBX ROAD SHOWS
September 30, 2002
The proposed new Bulletin Board Exchange (BBX) has been taking its show on the road. The BBX team has been
traveling around the United States (and Canada) to acquaint issuers, market makers and investors with the new
exchange that is scheduled to supplant the OTC Bulletin Board sometime next year. The Securities and Exchange
Commission still must give its stamp of approval, but the BBX seems ready to roll – application forms are already
printed and ready to mail once the SEC gives its okay.
The BBX will feature qualitative listing standards and an electronic trading system following the NASDAQ model.
Although BBX firms will not be required to maintain minimum shares prices, income or assets, the heightened listing
requirements are likely to impose an insurmountable barrier for many of the firms now trading on the OTC Bulletin
Board. (For a complete review of the proposed BBX listing requirements and trading rules, read BBX – A Better
Bulletin Board and BBX – Trading Rules).
In view of recent legislation and regulatory rulemaking, those rules should continue to evolve. For example, while
the BBX has proposed that each company’s audit committee must consist of a majority of independent directors,
the Sarbanes-Oxley Act of 2002 requires that all members of the audit committee be independent.
As a practical matter, what will this mean for investors? The public should benefit from enhanced disclosure
standards, real time surveillance, and corporate governance rules that require shareholder approval for significant
corporate transactions. Market makers will be required to maintain quotes on both sides of the market – the buy
and the sell.
Perhaps most important, the BBX will review the regulatory and legal history of officers, directors, promoters and
significant shareholders, and determine whether listing is in the public interest.
Still, investors will continue to have concerns. While market makers will be required to report their short position in
BBX stocks on a monthly basis, the BBX concedes that it cannot impose that same requirement on non-NASD
member firms. That means foreign broker-dealers - including those in Canada – may hold non-disclosed short
positions in BBX stocks.
And while the BBX will apply that public interest test to new listings, as a practical matter we wonder how the BBX
will be able to fully review the background of each officer, director and controlling shareholder of the initial wave of
applicants. As of August 2002 there were 3,753 companies listed on the OTC Bulletin Board. Assuming that only
half of those companies applied for BBX listing, how can the BBX possibly be expected to thoroughly investigate
each of the applicants? How many BBX Staff members will be assigned to that review? Are they expected to
conclude the initial reviews on any expedited timetable? It seems like an impossible task.
Investors will also be concerned with the fate of those OTC Bulletin Board companies that don’t make it to the
BBX. For the past several years, the OTC Bulletin Board has required listed companies to file periodic reports and
audited financial statements with the SEC. That means the public has been assured access to timely, material
information about those entities. Individual investors often rely upon that information, and its continued availability,
when choosing to invest in OTC Bulletin Board stocks.
Now, all of that could change. Once the OTC Bulletin Board disappears, the non-BBX companies will be relegated
to the Pink Sheets – a privately run trading system which has no listing requirements. That means the former OTC
Bulletin Board companies can choose to stop filing public reports – depriving investors of a valuable source of
information.
If you have questions or thoughts about the new BBX, you may wish to attend the BBX Forum in your area. A
complete list can be found at http://www.bbxchange.com/Forum_schedule/forum_schedule_index…
Stay tuned for more developments.
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