National Quotation Bureau (NQB): What It is, How it Works

What Is the National Quotation Bureau (NQB)?

The National Quotation Bureau (NQB), now known as the OTC Markets Group Inc. (OTCM), was a publisher of price information for stocks and bonds traded in the over-the-counter (OTC) market.

Understanding the National Quotation Bureau (NQB)

The NQB was founded in 1913 by financial book publisher Arthur F. Elliot and financier Roger Ward Babson. Prior to their collaboration, Elliot and Babson had both founded separate companies engaged in the compilation and dissemination of security prices. These two complementary services were then merged to form the NQB.

While it may be hard to appreciate today, given the abundance of financial information we now have access to, the NQB provided a very valuable service in the early 20th century by packaging scarce data and making it available to dealers and investors. At the time, the NQB published their bond data on yellow sheets of paper, while their stock data was published on pink sheets of paper. This simple fact gave rise to the term "pink sheets," which is now used to refer to securities that are not listed or traded on traditional stock exchanges.

Despite its roots in the pre-digital era, the NQB introduced real-time electronic quotations in 1999, completing its transition from literal printed pink sheets to the digital quotations we are familiar with today. In 2000, the NQB was renamed Pink Sheets LLC, which in turn became Pink OTC in 2008. Most recently, it was renamed to OTC Markets Group in 2011.

OTC Markets Group (OTCM)

Today, the OTC Markets Group lists over 10,000 securities and represents nearly $400 billion in annual trading volume. The company organizes its listings into various categories in order to provide clarity to investors.

At one end of the spectrum are securities offered on the OTCQX and OTCQB markets. These are relatively established companies that are required to post financial information with the OTC Markets Group while also adhering to various standards relating to the liquidity of shares, corporate governance, investor relations (IR) infrastructure, and other considerations.

On the other end of the spectrum are securities offered on the "pink market," a legacy of the pink sheets from over a century ago. These are securities that are offered without any financial or reporting requirements. In some cases these securities will offer little or no timely information to investors, raising the potential risk of fraud. Accordingly, these types of securities are considered to be very high-risk investments.

Further information is also provided within each of these categories, to help inform investors of the relative risk of the securities offered.