§ 220.11. Requirements for the list of marginable OTC stocks and the list of foreign margin stocks.
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/us/cfr/t12/s§ 220.11·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
(a)Requirements for inclusion on the list of marginable OTC stocks. Except as provided in paragraph
(f)of this section, OTC margin stock shall meet the following requirements:
(1)Four or more dealers stand willing to, and do in fact, make a market in such stock and regularly submit bona fide bids and offers to an automated quotations system for their own accounts;
(2)The minimum average bid price of such stock, as determined by the Board, is at least $5 per share;
(3)The stock is registered under section 12 of the Act, is issued by an insurance company subject to section 12(g)(2)(G) of the Act, is issued by a closed-end investment management company subject to registration pursuant to section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8), is an American Depository Receipt
(ADR)of a foreign issuer whose securities are registered under section 12 of the Act, or is a stock of an issuer required to file reports under section 15(d) of the Act;
(4)Daily quotations for both bid and asked prices for the stock are continously available to the general public;
(5)The stock has been publicly traded for at least six months;
(6)The issuer has at least $4 million of capital, surplus, and undivided profits;
(7)There are 400,000 or more shares of such stock outstanding in addition to shares held beneficially by officers, directors or beneficial owners of more than 10 percent of the stock;
(8)There are 1,200 or more holders of record, as defined in SEC Rule 12g5-1 (17 CFR 240.12g5-1), of the stock who are not officers, directors or beneficial owners of 10 percent or more of the stock, or the average daily trading volume of such stock as determined by the Board, is at least 500 shares; and
(9)The issuer or a predecessor in interest has been in existence for at least three years.
(b)Requirements for continued inclusion on the list of marginable OTC stocks. Except as provided in paragraph
(f)of this section, OTC margin stock shall meet the following requirements:
(1)Three or more dealers stand willing to, and do in fact, make a market in such stock and regularly submit bona fide bids and offers to an automated quotations system for their own accounts;
(2)The minimum average bid price of such stocks, as determined by the Board, is at least $2 per share;
(3)The stock is registered as specified in paragraph (a)(3) of this section;
(4)Daily quotations for both bid and asked prices for the stock are continuously available to the general public; ;
(5)The issuer has at least $1 million of capital, surplus, and undivided profits;
(6)There are 300,000 or more shares of such stock outstanding in addition to shares held beneficially by officers, directors, or beneficial owners of more than 10 percent of the stock; and
(7)There continue to be 800 or more holders of record, as defined in SEC Rule 12g5-1 (17 CFR 240.12g5-1), of the stock who are not officers, directors, or beneficial owners of 10 percent or more of the stock, or the average daily trading volume of such stock, as determined by the Board, is at least 300 shares.
(c)Requirements for inclusion on the list of foreign margin stocks. Except as provided in paragraph
(f)of this section, a foreign security shall meet the following requirements before being placed on the List of Foreign Margin Stocks:
(1)The security is an equity security that is listed for trading on or through the facilities of a foreign securities exchange or a recognized foreign securities market and has been trading on such exchange or market for at least six months;
(2)Daily quotations for both bid and asked or last sale prices for the security provided by the foreign securities exchange or foreign securities market on which the security is traded are continuously available to creditors in the United States pursuant to an electronic quotation system;
(3)The aggregate market value of shares, the ownership of which is unrestricted, is not less than $1 billion;
(4)The average weekly trading volume of such security during the preceding six months is either at least 200,000 shares or $1 million; and
(5)The issuer or a predecessor in interest has been in existence for at least five years.
(d)Requirements for continued inclusion on the list of foreign margin stocks. Except as provided in paragraph
(f)of this section, a foreign security shall meet the following requirements to remain on the List of Foreign Margin Stocks:
(1)The security continues to meet the requirements specified in paragraphs
(1)and
(2)of this section;
(2)The aggregate market value of shares, the ownership of which is unrestricted, is not less than $500 million; and
(3)The average weekly trading volume of such security during the preceding six months is either at least 100,000 shares or $500,000.
(e)Removal from the list. The Board shall periodically remove from the lists any stock that:
(1)Ceases to exist or of which the issuer ceases to exist; or
(2)No longer substantially meets the provisions of paragraphs
(b)or
(d)of this section or the definition of OTC margin stock.
(f)Discretionary authority of Board. Without regard to other paragraphs of this section, the Board may add to, or omit or remove from the list of marginable OTC stocks and the list of foreign margin stocks an equity security, if in the judgment of the Board, such action is necessary or appropriate in the public interest.
(g)Unlawful representations. It shall be unlawful for any creditor to make, or cause to be made, any representation to the effect that the inclusion of a security on the list of marginable OTC stocks or the list of foreign margin stocks is evidence that the Board or the SEC has in any way passed upon the merits of, or given approval to, such security or any transactions therein. Any statement in an advertisement or other similar communication containing a reference to the Board in connection with the lists or stocks on those lists shall be an unlawful representation. [Reg. T, 63 FR 2826, Jan. 16, 1998]
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- 17 CFR 240.12
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§ 220.11
Requirements for the list of marginable OTC stocks and the list of foreign margin stocks.
Fed. Reg.×1
Cite17 CFR 240.12
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