The difference between the offer and the price of the offer is the spread of the merchants. A large spread in relation to the purchase price can make the resale of a stock very expensive. To be profitable at the time of sale, the offer price of your stock must increase beyond the amount of this spread and the compensation calculated by your dealers and resellers. Remember that if the trader does not have an offer price, you might not be able to sell the stock after you buy it and may lose all your investment. While there may be significant gains in penny trading, there are also identical or greater risks of losing a significant amount of an investment in a short time. Although the definition of the penny portfolio is essentially identical to that of the designated security, the amended 15c2-6 rule covers a slightly different universe of securities transactions. For example, the definition of the penny portfolio in Rule 3a51-1 contains an exclusion for securities whose issuer has demonstrated net assets of $2 million or more, but adds a requirement that the issuer be operational for at least three years. Issuers that have been in business for less than three years must have at least $5 million in tangible assets to be excluded from the penny portfolio definition. In addition to the issuer`s net injury exclusion, Rule 3a51-1 provides, unlike Rule 15 quater2-6, for an alternative exclusion for the securities of an issuer with an average turnover of $6 million over the past three years (i.e.
revenue of at least $18 million until the end of the three-year period). A Penny share, like any other listed stock, is created by a process called an IPO or IPO. To be listed in the OTCBB, the company must first file a registration statement with the SEC or file a declaration in which the offer is eligible for an exemption from registration. It must also review government securities laws on sites where it wants to sell the stock. After approval, the company can begin ordering investor orders. Finally, the entity may request that the stock be listed on a larger exchange, or it may trade on the over-the-counter market or on the over-the-counter market. (a) an NMS (national market system) share that is a declared security (i) registered with a national stock exchange that has been in continuous service since 20 April 1992; or (ii) is listed either on a national stock exchange or on an automated listing system, which contains certain quantitative first-list standards and permanent listing standards that are duly linked to first-list standards.