Author Topic: Best Broker for OTC stocks - I need a recomendation  (Read 9755 times)

Spekulatius

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Re: Best Broker for OTC stocks - I need a recomendation
« Reply #40 on: February 08, 2019, 07:17:43 PM »
Another issue with Interactive Brokers. I bid on an stock (which I purchased before on IB) and the order remains in “blue” status, meaning that the exchange doesn’t accept the order. This has never before happened to me and seems to be only with one stock. I put in a ticket with and they first told me that there is no bid ask. However, I lok at the same stock with E*TRADE and Fidelity and there is an bid ask. After I put in a second ticket the answer was as follows:

Quote
IB does not trade against your order, sell your order to a third party or take the other side of the trade. IB is a direct access Broker that routes order electronically to Pink/OTC market centers. If they do not want to trade the symbol then they are not required to make any Bid/Ask markets. Your order will rest on IB's server until we can send it to an OTC Market Center that will trade the order.

This does not make sense, because I know that the stock has traded since I made a bid ask. It almost seems like IB is trading in a different exchange than these other bid ask or trades go though. Anyone understands what’s going on? Again, I have traded the same stock before using IB.
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Hielko

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Re: Best Broker for OTC stocks - I need a recomendation
« Reply #41 on: February 09, 2019, 06:53:21 AM »
How things trade on the pink sheets is always a bit of a mystery. Stocks on the pink sheets don't trade on any real exchange and the original pink sheets printed on the pink paper was obviously only a service to make a bid/ask public on certain stocks. 20/30 years ago it was replaced by an electronic quotation system, but it still was only a system to provide stock quotes, not a system to handle trades. OTC Markets has the OTC Link ATS (Alternative Trading System) that does include trading functionality, and there are probably some other platforms that can also handle OTC trades, but I think this mix of different systems, not all designed for trading itself, makes it possible that sometimes you see quotes but without the ability to trade them electronically.

wabuffo

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Re: Best Broker for OTC stocks - I need a recomendation
« Reply #42 on: February 09, 2019, 07:59:27 AM »
Stocks on the pink sheets don't trade on any real exchange.

In fact, in certain cases, the stocks aren't supposed to trade at all yet buys and sells happen on paper?/electronic spreadsheets?

In the case of OTC stocks that are liquidating, the Company will often direct their transfer agent to cease trading in the stock.  Yet the OTC brokers will continue to record transactions in the stock well after the transfer agent has frozen the final shareholder list.  Thus, there are no shares transferring hands, just a bunch of brokers keeping records on their own.

This sometimes creates problems with liquidating distributions, record dates and ex-dividend dates since the Company and its transfer agent "send" the distributions to the shareholder of record as of the cease trading date.  The OTC brokers' back offices then have to redirect the liquidating distributions beyond the transfer agent's instructions based on the brokers' own understanding of who owned which shares on what date dependant on FINRA's interpretation of record dates and ex-dividend dates.

The confusion isn't about whether you owned a stock or not after the cease trading date, but instead, confusion over what the Company's instructions mean and how they are to be executed beyond the cease trading date.  Companies don't really understand the world beyond their transfer agent and this confusion can lead to people who shouldn't get a distribution to get it and vice versa.

It is a bit of the wild, wild west and there have been occasional flustercucks because of this kind of activity in OTC-land.

wabuffo
« Last Edit: February 09, 2019, 08:03:46 AM by wabuffo »

KJP

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Re: Best Broker for OTC stocks - I need a recomendation
« Reply #43 on: March 27, 2020, 12:50:23 PM »
Based on some comments in this thread two years ago, I opened an account at Fidelity to keep open the option of buying non-reporting OTC securities.  I tried to place a few stink bids today via Fidelity on LICT and ADVC and couldn't do it.  For some reason I could place one on LAACZ after filling out a waiver form.  So, now I've had no luck at both Merrill and Fidelity with many OTC companies, even ones that publish audited financials on their websites like LICT.  I've previously had trouble buying them through Interactive Brokers as well.

So, anyone have current recommendations for a US resident on the best broker to buy this type of stuff through?

Spekulatius

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Re: Best Broker for OTC stocks - I need a recomendation
« Reply #44 on: March 27, 2020, 01:20:51 PM »
Based on some comments in this thread two years ago, I opened an account at Fidelity to keep open the option of buying non-reporting OTC securities.  I tried to place a few stink bids today via Fidelity on LICT and ADVC and couldn't do it.  For some reason I could place one on LAACZ after filling out a waiver form.  So, now I've had no luck at both Merrill and Fidelity with many OTC companies, even ones that publish audited financials on their websites like LICT.  I've previously had trouble buying them through Interactive Brokers as well.

So, anyone have current recommendations for a US resident on the best broker to buy this type of stuff through?

Schwab aus better for OTC stock than Fidelity. Fidelity allows to buy some OTC stocks, but many are restricted.
Life is too short for cheap beer and wine.

KJP

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Re: Best Broker for OTC stocks - I need a recomendation
« Reply #45 on: March 27, 2020, 01:29:43 PM »
Based on some comments in this thread two years ago, I opened an account at Fidelity to keep open the option of buying non-reporting OTC securities.  I tried to place a few stink bids today via Fidelity on LICT and ADVC and couldn't do it.  For some reason I could place one on LAACZ after filling out a waiver form.  So, now I've had no luck at both Merrill and Fidelity with many OTC companies, even ones that publish audited financials on their websites like LICT.  I've previously had trouble buying them through Interactive Brokers as well.

So, anyone have current recommendations for a US resident on the best broker to buy this type of stuff through?

Schwab aus better for OTC stock than Fidelity. Fidelity allows to buy some OTC stocks, but many are restricted.

Thanks.  I will give Schwab a try.