Risks of trading OTC securities
Published: Oct 17, 2022
Updated: May 23, 2025
Important note: Effective September 28, 2021, an amendment to SEC Rule 15c2-11, subject to certain exemptions, restricts broker dealers from publishing quotations on the U.S. OTC market for companies that have not made the required financial and company information available to investors and regulators. This will impact certain OTC stocks classified as Pink No Information, Grey Market, or Expert Market. As of September 28, it may be much more difficult to trade these stocks, as quotes and market liquidity may be limited. This may limit your ability to open or close positions in these stocks and you may not be able to trade at a price that you believe reflects the stock’s current value. For more information, see the section below.
Important note: As of Tuesday Oct 24, 2023 certain OTC securities are no longer able to be traded with GTD/GTC order durations. If you enter a GTC/GTD order for a security that is affected, you will receive an order rejected notification. Please try again with an order duration of DAY.
Companies that trade on the OTC markets are typically smaller, less liquid organizations that are unable to fulfill the listing requirements of exchanges like the TSX, NYSE or NASDAQ. We've listed below some of the common risks associated with trading OTC securities
Non-DTC eligible:
Securities that trade on the OTC markets face the risk of becoming non-DTC eligible, or in other words, lose their electronic trading eligibility.
You may still be able to trade non-DTC securities, but it would have to be done manually through our Trade Desk. Additional fees apply.
OTC-listed securities ending with the letter F and are typically five characters long face the highest risk of becoming non-DTC eligible.
Route/Order rejections:
OTC symbols may be rejected at any time by our U.S executing brokers for a variety of reasons.
If you receive a reject you have the option to adjust the routing of your order from AUTO to MNGD or other available routes.
If changing the routing is not successful, you may call the Trade Desk at 1.866.980.9590 to review if any other options exist.
Security delisting:
Takes place when companies go bankrupt, cease operations, or when they’re unable to meet the listing requirements.
When a security is delisted, it becomes untradeable and investors could lose their entire investment.
Trading halt:
Stock exchanges have the authority to suspend (halt) trading of a particular security for regulatory or non-regulatory reasons at any time.
Cease Trade Orders (CTOs):
Canadian Securities regulators may issue CTOs against selected securities for failing to meet their standard listing or trading requirements. Some securities that trade on the OTC markets also trade in Canada.
