the otc pink now branded as the pink open market is the lowest and most speculative tier of the three marketplaces for the trading of over the counter otc stocks all three tiers are provided and operated by the otc markets group this marketplace offers to trade in a wide range of equities through any broker and includes companies in default or financial distress 
since it has no disclosure requirements the categorization of otc pink companies is from information provided by the company otc markets group now markets otc pink as the pink open market but the historical name still persists 1understanding otc pinkthe over the counter otc market is a decentralized market where securities not listed on major exchanges are traded directly by a network of dealers instead of providing an order matchmaking service like the nyse these dealers carry inventories of securities to facilitate any buy or sell orders because information was initially printed on pink paper the otc pink is also referred to as the pink sheets 2the otc pink as well as its companion tiers otcqx and otcqb is run by otc link the link is an electronic inter dealer quotation and trading system developed by otc markets group registered with the sec as a broker dealer otc link is also an alternative trading system ats 3otc link allows broker dealers not only to post and disseminate their quotes but also to negotiate trades through the system s electronic messaging capability this feature enabled it to replace the over the counter bulletin board otcbb which was a quotation only system 4on november 8 2021 the financial industry regulatory authority finra chose to discontinue the otc bulletin board otcbb a quotation system it operates between dealers and remove all otcbb associated rules from its rulebook 5regulation of the otc pink marketplacebecause of the variable self reporting nature by otc pink companies they are classified based on the quality and quantity of information they provide to investors classification is as follows the pink open market previously had a category of no information securities which identified companies with the lowest level of disclosure those that had not filed any information with either the sec or the otc disclosure and news service in six months 6 such securities were considered highly risky for investors in 2021 following updated sec transparency rules securities that were once labeled no information moved to otc market group s expert market which is only available to broker dealers and other professional investors not to the general public 7 they are not promoted as investment options for average investors all broker dealers that trade on the otcqx otcqb and otc pink securities have to be financial industry regulatory authority finra members further they must register with the sec and are subject to state securities regulations in this way as with exchange traded securities investors trading otc securities are protected from an unethical broker dealer s illegal practices by the same sec and finra rules such as best execution limit order protection firm quotes and short position disclosure 8who should invest through otc pink otc pink provides for transparent trading and best execution although there are no financial standards or disclosure requirements the marketplace trades a wide range of domestic and foreign companies including penny stocks shell companies distressed companies and dark companies that cannot or will not provide company information to investors because of the lack of reporting requirements only professional and sophisticated investors with a high risk tolerance should trade here investors should perform all the proper due diligence by researching the companies they are considering and reviewing all business activities terminology updatesit should be noted that the terms pink sheets or otc pink are considered outdated in the context of today s financial markets the terminology that was once known as pink sheets has evolved into the otc markets group which operates regulated marketplaces for trading over the counter stocks these include the otcqx otcqb and pink markets each with varying levels of financial standards and regulatory oversight thus referring to these markets collectively as pink sheets or otc pink is no longer accurate however the terms pink or pink market are still in everyday language as seen in the 2022 market data annual review 9the pink market operates as an open marketplace with no obligatory financial standards or disclosure requirements companies in this tier are not mandated to register their stock with the sec depending on the quantity and promptness of information they share with investors these companies can be further divided into categories such as current limited or no public disclosure the regulatory structure of the pink market has changed over the past couple of years for instance components such as dark securities have been entirely shifted out of the market 