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Wednesday, October 13, 2010

Market Makers Shifting Orders from OTCBB to OTCQB Electronic Platform

OTC Bulletin Board market markers are billed participation fees by The Financial Industry Regulatory Authority (FINRA) based on the number of positions during a given month.  Because such fees have made it challenging for market maker firms to maintain markets in stocks that are not active, such firms are increasingly moving market making in OTCBB stocks from the OTCBB, which is a telephonic only market, to a new electronic interdealer quotation system created by Pink OTC Markets, Inc. that lacks any participation fees. 

In Forms 8-K filed on 10/13/10 and 10/8/10, respectively, National Asset Recovery Corp. (SEC file no. 333-150135) and Infinity Capital Group, Inc. (000-30999) each report that its stock quotation symbol had been deleted from the OTCBB as a result of not having a sufficient number of market makers providing quotes on the company's common stock for four consecutive days, thereby being deemed to be deficient in maintaining a listing standard at the OTCBB pursuant to Rule 15c2-11.  Both issuers now trade on the OTCQB, a new market for OTC-traded companies that are registered and current in their reporting obligations to the SEC or a U.S. banking or insurance regulator. 

Pink OTC Markets segments OTC securities into three tiers: the quality-controlled OTCQX platform that requires a minimum bid price and other listing standards, the mid-tier OTCQB, and the Pink Sheets speculative trading marketplace that has no financial standards or reporting requirements.  The firm quotes nearly 10,000 stocks, making it the largest marketplace in shares of companies that don't list on exchanges.

Other SEC filers that report they now trade on OTCQB due to failure to meet minimum bid requirements of an exchange or NASDAQ include Allied Defense Group (as of 9/21), Pinnacle Gas Resources, Inc. (9/16), MACC Private Equities Inc. (9/14), Nextwave Wireless Inc (7/22) and PC Group, Inc. (7/21).

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