In the article it is spoken about Safeguarding Yourself. The over the counter market is a term used to define a decentralized market of securities that are not included on the list of exchange. They are comprised of a treaty between two independent parties who come up with their own terms of agreements regarding the manner of how to conduct trade.
The buy and sell activities done by the parties are not regulated or influenced by a regulating third party. Instead, the investors’ buy and sell activities are facilitated by so-called intermediaries or intermediaries who hold their inventories of securities. Instead of negotiations being conducted over the conventional physical trading ground, over the counter trade is usually performed over the telephone, the fax machine and electronic networks.
The Over the Counter Market is a great way of generating a steady flow of income and big return of investments due to the larger market as compared to that of the exchange market. Because of its flexibility, businesspersons are provided with the ultimate freedom to create and change their own terms of negotiations, depending on which they deem to be more convenient to them or which would be more beneficial to their business. Despite the great number of advantages that can be yielded from over the counter investing, it is not without associated risks.
One of the biggest pitfalls of over the counter investing is the fact that its effectiveness lies on whether the engaging parties are reputable and capable of honoring their word and carrying out their part of the deal. Once businesspersons make the mistake of dealing with a company or a person who has an ill reputation, all the hard work, money and dreams they had for their business might end up in the gutter.
Therefore, It is important for businesspersons engaged in over the counter trade to perform a complete background check on the company or person that they are about to deal with. Having enough information will allow you to know whether they are capable of providing good and quality services to protect the assets of the average investor.
The Securities and Exchange Commission has come up with the OTCBB Eligibility Rule, which states that all active over the counter companies on the OTC market is required to report regarding their financial information to the SEC. This action enables them to meet eligibility requirements. Because of this rule, all stocks traded on the over the counter market can now possess publicly available financials. The financials can then be assessed to over a number of financial databases.
Consequently, companies are then urged to make sure that their financial statements are reflected accurately. Once a stock is suspected of fraud, the OTC immediately considers suspending the trade. Investors need not grope in the dark anymore and make blind guesses on the reputation of a company. This greatly minimizes worry and risks on the part of the investor. Moreover, they are able to gain a good quality trade for their business.