FINRA

Over-the-Counter-Equities

OTC Threshold

Pursuant to Rule 203(b)(3) of Regulation SHO and FINRA Rule 4320, a participant of a registered clearing agency (i.e., a clearing firm), that has a fail to deliver position at a registered clearing agency (i.e., National Securities Clearing Corporation) in a Threshold Security for 13 consecutive settlement days must immediately close out that fail to deliver position by purchasing shares of like kind and quantity. (Please click the below Information icon for more details about the Threshold Security).

NOTE: If an OTC Threshold list is not available for a certain date, firms must use the prior day’s OTC Threshold list to comply with Rule 203(b)(3) of Regulation SHO or FINRA Rule 4320 until the relevant OTC Threshold list becomes available. Once available, firms must analyze the OTC Threshold list to ensure full compliance with the aforementioned rules. Similarly, if FINRA publishes an updated OTC Threshold list, firms must review the new list to determine whether any additional action must be taken to maintain compliance with the rules. Be aware that in situations where the OTC Threshold list was posted late, or was amended by FINRA on a subsequent date, that list will be reflected in the archives with a date/timestamp that is later than the date contained in the name of the list.

OTC Threshold Securities as of Oct 20, 2017Threshold Issue Data Information

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Trade Date Symbol Issue Name Market Reg SHO Threshold Flag Rule 4320

A Threshold Security is defined in Rule 203(c)(6) of Regulation SHO, as any equity security of any issuer that is registered pursuant to Section 12 of the Exchange Act, or that is required to file reports under Section 15(d) of the Exchange Act (commonly referred to as “Reporting Issuers”), where, for five consecutive settlement days:

  • There is an aggregate fail to deliver position at a registered clearing agency of 10,000 shares or more;
  • The level of the aggregate fail to deliver position is equal to at least one-half of one percent of the issuer’s total shares outstanding; and
  • The security is included on a list published by a self-regulatory organization (SRO).

FINRA Rule 4320 defines a Threshold Security as an equity security of an issuer that is not registered pursuant to Section 12 of the Exchange Act, or that is not required to file reports under Section 15(d) of the Exchange Act (i.e., a Non-Reporting Issuer), where, for five consecutive settlement days:

  • There is an aggregate fail to deliver position at a registered clearing agency of 10,000 shares or more;
  • The aggregate fail to deliver position is valued at $50,000 or more based on the last sale price for the security during the five consecutive settlement date period, or, if not available, the closest last sale price reported prior to the five consecutive settlement date period; and
  • The security is included on a list published by a self-regulatory organization (SRO).

A security ceases to be a Threshold Security under both Rule 203(c)(6) of Regulation SHO and FINRA Rule 4320,if it does not meet the relevant requirements for five consecutive settlement days.

Data Field Definition
Date Trade Date
Issue Name Name of the issue
Symbol Symbol identifier
Market Indicates whether the issue is OTC Bulletin Board or non-Bulletin Board
Reg SHO Threshold Flag

Subject to the requirements of SEC Rule 203 of Regulation SHO
Where there is an aggregate fail to deliver position for five consecutive settlement days at a registered clearing agency totaling 10,000 shares or more and equal to at least 0.5% of the issuer’s total shares outstanding.

When this occurs, the issue becomes subject to mandatory close-out requirements outlined in the SEC's Regulation SHO.

The allowed values are:

  • Y = Yes, if the issue is subject to mandatory close-out requirements of Regulation SHO
  • N = No, if the issue is NOT subject to mandatory close-out requirements of Regulation SHO
Rule 4320 Subject to the requirements of FINRA Rule 4320

Where, for five consecutive settlement days, there are aggregate fails to deliver at a registered clearing agency of 10,000 shares or more and the reported last sale during normal market hours would value the aggregate fail to deliver position at $50,000 or more.

When this occurs, the issue becomes subject to mandatory close-out requirements outlined in NASD Rule 3210.

The allowed values are:

  • Y = Yes, if the issue is subject to mandatory close-out requirements of Rule 4320.
  • N = No, if the issue is NOT subject to mandatory close-out requirements of Rule 4320.

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