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Eligible Inter-Dealer Quotation Systems

The penny stock rules under the Exchange Act require broker-dealers engaging in certain over the counter transactions in low-priced stocks to provide customers with specified information. See Securities Exchange Act Release No. 30608 (April 20, 1992), 57 FR 18004 (April 28, 1992). The penny stock rules permit a broker-dealer to fulfill some of these disclosure obligations by relying on pricing information available from a system that meets the definition of “qualifying electronic quotation system” (QEQS). SEC rules define a QEQS as either an automated interdealer quotation system (IDQS) that has the characteristics set forth in Exchange Act Section 17B(b)(2), or any other automated IDQS designated by the Commission for these purposes. See, e.g., Exchange Act Rule 15g-3(c)(5). See also 17 CFR 240.3a51-1, 15g-1 through 15g-9 and 15g-100.

At FINRA’s request, the SEC has designated the FINRA OTC Reporting Facility (ORF), together with any FINRA-member IDQS that meets specific requirements, including heightened governance (defined as an “Eligible IDQS”), as a QEQS for purposes of the penny stock rules and as an automated IDQS for the purposes of the definition of ”penny stock” in Exchange Act Rule 3a51-1. See Letter from J. Matthew DeLesDernier, Assistant Secretary, SEC, to Robert Colby, Executive Vice President and Chief Legal Officer, FINRA, dated June 21, 2021.

FINRA maintains below a current list of any Eligible IDQS that, together with the FINRA ORF, meets the above designation:

  • Global OTC
  • OTC Link LLC

For additional information, see the SEC's response to FINRA's QEQS designation request letter.