Commentary

Tim Quast
Traders Magazine Online News

We're All HFTs Now

In this guest commentary, author Tim Quast looks back at the history of HFT and how the market has evolved to where many firms now fit the definition of high-frequency trader.

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January 1, 1998

Automated Pink Sheets

By John A. Byrne

The pink sheets, the last vestige of over-the-counter trading before Nasdaq came about, is planning to shed its manual, old-fashioned image. The pink sheets, pending regulatory approval, want to automate. An automated pink-sheet system, of course, would spell the end of a quaint but increasingly popular style of trading. That system still uses pink -colored paper to exclusively carry the price-quote information on 2,700 equity issues and a roster of stocks quoted on the OTC Bulletin Board.

The National Quotation Bureau, which owns and operates the pink sheets, said the new system would provide a real-time bulletin board of market-maker quotations and an electronic negotiation and order-routing facility for subscribers. In a letter to subscribers, the company said it is in discussions with the Securities and Exchange Commission and the National Association of Securities Dealers, "to increase the visibility and transparency of market-maker quotations through automation of our service."

To be sure, the pink sheets account for a small proportion of trading in the full universe of Nasdaq and over-the-counter stocks. But that could change dramatically over the coming months under rules approved for the OTC Bulletin Board. These rules will require companies listed on the electronic stock-quotation service to file financial statements. As a result, some pros think hundreds if not thousands of companies will delist to the pink sheets.