OTC Markets Restates Compliance Policy in Wake of NERO


While OTC Markets Group has put safeguards for investors in place for trading on the Pink – Open Market, more brokerage and clearing firms use OTC “Caveat Emptor” flag and “Pink No Info” to restrict customer trading.

Many automate the process with our OTC Compliance File.


The OTC Compliance Data File provides broker-dealers and compliance/risk mitigation teams with important data points on 10,000 OTCQX, OTCQB, and Pink U.S. and global securities. This simplifies the process of identifying securities that are compliant under the SEC Penny Stock Rule and FINRA’s OTC Recommendation rule.

Below is a sample firm Caveat Emptor policy:

 Effective on March 29, 2016, Fidelity Brokerage Services will no longer permit correspondents or their customers to effect new purchases of additional categories of securities. Specifically, the current prohibition regarding Caveat Emptor securities is being extended to cover OTC Pink-No Information and certain Grey Market securities. FBS is taking this action as a result of its regular review of internal policies in an effort to ensure that they are consistent with evolving industry standards and regulatory requirements. Description Beginning in March 2016, the Fidelity Brokerage Services prohibition will apply to securities in three categories: Caveat Emptor, OTC Pink – No Information and certain Grey Market1 . We believe that this new policy will further support Fidelity Brokerage Service’s ongoing efforts to prevent potential fraudulent / higher risk transactions. The policy applies to purchases entered into Fidelity Brokerage Services order systems as well as trades executed away from FBS, including DVP transactions. The prohibition does not apply to buy to cover short positions. Fidelity Brokerage Services recognizes these policy changes may present the need for process changes to be made by some of our correspondent clients; however, this policy brings Fidelity Brokerage Services further in line with evolving industry standards in this area. In the event you have additional questions or concerns, please contact your Relationship Manager.


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