Legal Definitions - National Daily Quotation Service

The National Daily Quotation Service refers to a system that provides pricing information for securities that are traded over-the-counter (OTC) rather than on major stock exchanges like the New York Stock Exchange (NYSE) or NASDAQ. Historically known as the "Pink Sheets" because of the color of the paper they were printed on, this service (now primarily electronic, managed by OTC Markets Group) offers real-time bid and ask prices for a wide range of unlisted stocks. These often include shares of smaller companies, companies that do not meet the stringent listing requirements of major exchanges, or foreign companies whose shares are traded in the U.S. without a full exchange listing. Its purpose is to provide transparency and facilitate trading for these less-regulated securities.

Here are some examples of how the National Daily Quotation Service applies:

• A Promising Biotech Startup: Imagine a small biotechnology company, "Innovate BioSolutions," has developed a groundbreaking new drug. While the company is still in its early stages and doesn't yet meet the strict financial and reporting requirements to be listed on the NASDAQ, it wants to allow early investors and the public to trade its shares.

  How it illustrates the term: Innovate BioSolutions' shares would likely be quoted on the National Daily Quotation Service. This service provides a platform for brokers and investors to see the current bid (the highest price a buyer is willing to pay) and ask (the lowest price a seller is willing to accept) prices for Innovate BioSolutions' stock, even though it's not on a major exchange. This allows trading to occur and provides transparency for its valuation.

• Shares of a Delisted Company: Consider "Global Manufacturing Inc.," a company that was once listed on the NYSE but failed to maintain certain financial standards, leading to its delisting. Despite being delisted, there are still shareholders who own Global Manufacturing stock and wish to buy or sell it.

  How it illustrates the term: After delisting, Global Manufacturing Inc.'s shares would typically move to be traded over-the-counter, with their prices quoted through the National Daily Quotation Service. This service ensures that there is still a public record of trading interest and prices, allowing existing shareholders to liquidate their positions or new investors to acquire shares, albeit in a less regulated market.

• A Foreign Company's U.S.-Traded Shares: "EuroTech Solutions," a successful European software company, wants to make its shares accessible to U.S. investors without going through the complex and costly process of a full listing on a U.S. stock exchange.

  How it illustrates the term: EuroTech Solutions might arrange for its shares (often in the form of American Depositary Receipts or ADRs) to be traded over-the-counter in the U.S. The National Daily Quotation Service would then publish the bid and ask prices for these EuroTech shares, providing U.S. investors and brokers with the necessary pricing information to trade them without the company needing to meet the stringent requirements of a major U.S. exchange.