How to buy OTC stocks
1. Sign up with a broker. Not all brokers let you buy stocks on OTC Markets but don’t worry! We complied a list of brokers who do and you can compare them below.
2. Fund your account. Make sure you have enough funds to cover the position you want to open.
3. Do your research. Make sure you research the stocks you want to invest in.
4. Find the stock on your chosen platform. Just type in its ticker symbol or company name (for example: VWAGY for Volkswagen).
5. Buy your OTC stock.
What are OTC stocks?
OTC (“over-the-counter”) stocks are stocks that are not listed on a major, centralized exchange like the NASDAQ, NYSE and are instead traded by broker-dealers. Broker-dealers are individuals or investment firms that trade stocks for their own portfolios or the portfolios of their clients.
Why do stocks trade OTC?
Many OTC stocks are companies that are just getting off the ground. They may not meet volume requirements of traditional markets, or the company is looking to save money by listing OTC.
Other stocks are listed in OTC Markets because companies have been delisted from major exchanges, for example:
- A businesses has decided to go private.
- A business has chosen to delist certain classes of its stock, in which case, those stocks could end up being traded over the counter.
- In rare cases, a business has been forced off an exchange for failing to adhere to rules set by stock exchange regulators or the US Securities and Exchange Commission (SEC).
Where to buy OTC stocks
Not every broker offers OTC trading, but you can trade OTC stocks through these trading platforms below. Compare the features of each platform to find the right one for you.
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What is an OTC Market?
OTC stocks are listed in 1 of 3 OTC markets owned and managed by the OTC Markets Group.
|Name of market||Description|
|OTCQX (The Best Market)||The qualifications to list on this market are stricter than for either of the other markets. Many of these stocks are for blue-chip companies in Canada, Europe, Brazil and Russia. Penny stocks cannot trade on this platform.|
Examples include Heineken N.V. (HINKF), Deutsche Telekom AG (DTEGF) and adidas AG (ADDDF).
|OTCQB (The Venture Market)||This is the mid-tier platform on which OTC stocks can trade. Most of the stocks listed on this platform are for young and growing companies in the US and other countries.|
Examples include Liberty Broadband Corp. (LBRDB), Solaris Resources Inc. (SLSSF) and Freddie Mac (FMCC).
|OTC Pink (The Open Market)||Stocks that don’t qualify for the OTCQX or OTCQB are listed on OTC Pink by default. Companies don’t have to disclose information to be listed, which is why these stocks are considered the most risky.|
What are pink sheets?
Pink sheets refer to stocks listed on OTC markets. Formerly known as the National Quotation Bureau (NQB), OTC Markets listed the prices of stocks and bonds on pink and yellow papers. The NQB was renamed Pink Sheets LLC in 2000 and again to OTC Markets Group in 2011.
OTC stocks list
There are more than 12,000 stocks on OTC Markets. Some companies choose this avenue to avoid filing with the SEC, while others may have been delisted from other exchanges.
Others, like Samsung Electronics (OTC:SSNL.F) are massive, billion-dollar-market-cap companies that trade primarily on foreign exchanges. Unless you have a brokerage that allows you access to these exchanges (in the case of Samsung, the Korean stock exchange) then you will need to buy the OTC version of the stock.
Many stocks trade over-the-counter because the company is still to small or infrequently traded to meet the volume thresholds of larger exchanges. For instance, before Walmart became the conglomerate it is today, it traded OTC.
Some companies with stocks listed on OTC Markets include:
- Grayscale Ethereum Trust (ETHE)
- Nestlé S.A. (NSRGY)
- Nissan Motor Co., Ltd. (NSANY)
- Alimentation Couche-Tard Inc. (ANCUF)
- Volkswagen AG (VWAGY)
- Enbridge Inc. (EBBNF)
OTC stocks vs. penny stocks
OTC stocks are stocks that are listed on one of the markets owned by the OTC Markets Group. Penny stocks simply refers to stocks that are priced particularly low, usually under $5.
Some penny stocks trade on well known stock exchanges such as the NASDAQ. OTC stocks may be cheaper but don’t necessarily count as penny stocks.
Risks of trading OTC stocks
OTC stocks are more risky than traditional stocks. Companies aren’t held to the same reporting standards set out by the SEC as traditionally-listed stocks are. They can be difficult to research on your own as companies don’t need to release as much financial information as would be required for stocks listed on a major exchange. If you want to take on some more risk and expose yourself to OTC markets, make sure that you research the company thoroughly, and treat lack of information as a red flag.
- OTC (“over-the-counter”) stocks are stocks not listed on a major, centralized exchange like the NASDAQ, NYSE and are instead traded by broker-dealers.
- OTC stocks can be a great opportunity for investors, but they are also risky and harder to research.
- Make sure that your chosen trading platform lets you trade OTC stocks, and make sure you know the risks before moving forward.
To learn more about online stock trading, check out our detailed guide here.
Frequently asked questions
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