The majority of larger companies that trade publicly choose to list their stocks on one of the major exchanges - the NYSE or Nasdaq. However, many companies are unable to meet the financial or other listing requirements for the exchanges, or choose not to subject themselves to the regulatory requirements that come with an exchange listing, and therefore trade instead in the over-the-counter (OTC) market. OTC Markets Group is the largest operator in this market, although quotes are also available through FINRA’s OTC Bulletin Board (OTCBB). Recent changes and innovations have also caused the OTC market to become more attractive to large foreign firms that use it as a means to access U.S. investors without the cost and duplicative regulatory burden of a U.S. stock exchange listing.

Basic Characteristics
While NYSE functions as auction markets, the OTC market is dealer-driven. The OTCBB and OTC Markets Group’s OTCQX, OTCQB and OTC Pink marketplaces fall into the latter category, and all stocks trade there as a result of broker-dealers quoting a company’s stock. This compares to the exchanges, where companies must apply and qualify to be listed with the exception of OTCQX, OTC Markets Group's highest marketplace, for which there are qualification requirements.

The Penny Stock Reform Act of 1990 mandated that the SEC create a uniform electronic quotation system for OTC stocks. The OTCBB was created to provide this and now provides real-time securities data for 1,000 securities and is used by 80 market makers. Although FINRA is responsible for overseeing its daily operations, the OTCBB is regulated by the SEC.