OTCBB Glossary - L

Trading firms interested in participating in the OTCBB choose between the following three subscription levels, depending on the functionality required: viewing market information, reporting trades, or entering quotes in OTCBB securities.
 

• Level I Subscription
  Level I disseminates OTCBB quote data worldwide through a variety of participating market data vendors.
   
• Level II Subscription
  Level II allows for querying and order-entry of trades on the OTCBB by FINRA member firms through either a NASDAQ Workstation or a private trading service device. Subscribers can:
  • Access OTCBB information.
  • View:
  • daily statistical and index-related information;
  • share and dollar volume leaders, net gainers and losers; and
  • report trades in OTCBB stocks within 30 seconds of execution.
     
• Level III Subscription
  Level III provides all the functionality of a Level II subscription, plus the capability to enter quotations for individual securities through a NASDAQ Workstation. Subscribers can:
  • Enter, retrieve, monitor, and adjust quotations in response to changing market conditions for OTCBB securities.
  • Report, compare, and clear trades through automated services.

A Limit Order is an order to buy or sell a stock at a customer-specified price.

The Limit Order Display Rules generally require a market maker that receives a customer limit order priced at or better than its current quote and that does not immediately execute the order, to display the order to the entire marketplace. Alternatively, the Market Maker can choose to send the order to another Market Maker or ECN for display, consistent with the rules. Regulation NMS Rule 604 sets forth the display requirement for NMS Securities and FINRA Rule 6460 sets forth the display requirement for OTC Equity Securities, including those quoted on the OTCBB.

The Limit Order Protection Rule, FINRA Rule 5320 (Prohibition Against Trading Ahead of Customer Orders), generally provides that a member that accepts and holds an order in an equity security from its own customer (or customer of another broker-dealer) without immediately executing the order is prohibited from trading that security on the same side of the market for its own account at a price that would satisfy the customer order, unless it immediately thereafter executes the customer order up to the size and at the same or better price at which it traded for its own account.

A condition, where the ask price of one Market Maker in a given security is the same price or lower than the bid price of another Market Maker, thereby producing locked or crossed quotations, respectively. FINRA Rule 6437 (Prohibition from Locking or Crossing Quotations in OTC Equity Securities), generally requires that members implement policies and procedures that reasonably avoid displaying, or engaging in a pattern or practice of displaying, locking or crossing quotations in any OTC Equity Security.