OTC Market Makers - Nasdaq and OTC Markets
Chapters in this video
- 0:00 The monopoly versus the bazaar: NYSE vs Nasdaq structure
- 1:00 Nasdaq market makers: principal-only capacity trap
- 2:36 Four obligations and the penalty for cold feet
- 3:34 Minimum quotation size scales with stock price
- 3:58 Non-Nasdaq OTC equities and the FINRA rules
- 4:20 Three-tier OTC hierarchy: OTCQX down to OTC Pink
- 5:48 Penny stock and bankruptcy bar from OTCQX
- 6:29 NYSE vs Nasdaq head-to-head comparison matrix
- 6:58 Rapid-fire exam recap
What this video covers
- Why multiple competing market makers replace the single designated market maker structure when you move from the New York Stock Exchange to Nasdaq
- The exact capacity of a Nasdaq market maker: principal only (dealer), never agent (broker), and why the exam tests this distinction relentlessly
- The four continuous obligations every Nasdaq market maker must meet, and why failure to honor the minimum quotation size triggers withdrawal of quotation privileges
- How minimum quotation size scales inversely with stock price: smaller share commitments for premium securities, larger commitments for lower-priced securities
- The three OTC Markets Group tiers ranked by disclosure level: OTCQX Best Market (highest), OTCQB Venture Market (middle), and OTC Pink Open Market (lowest)
- Why penny stocks (generally under $5) and bankrupt companies are permanently barred from OTCQX regardless of disclosure quality
- The head-to-head structural differences between the NYSE designated market maker and Nasdaq or OTC market makers in number, capacity, price discovery, and spread dynamics
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