The Pink Sheets Have No Listing Requirements

Category: Finance.

This is not the color of bed sheets you may be looking for at the Local store.

The pink sheets as we know it today- is an electronic quotation system for over the counter securities. Pinks sheets when it comes to stock markets refers to the color of the paper that quotes were made on in the past. These listings are then called penny stocks. The Pink sheets have no listing requirements. Companies that are listed in the pink sheets may or may not be able to meet the requirements of the New York Stock Exchange and the Nasdaq. Companies with no financial history can be included in the Pink sheets listings. This enables companies to raise capital who in this case would be unable to through the regular stock exchange.

Therefore it needs to be clear that the pink sheets are not a registered stock exchange. So it must be noted companies within this exchange pose a greater risk. The reality with pink sheets as is with penny stocks is the low cost of investment. This is due in large part by the fact that companies on this exchange do not have to disclose much if any in the way of financial data. This lures a lot of people in. Because there are less requirements and very little financial data if any, one has to note that no history can mean that a company could be in financial ruin trying to raise capital. They think because of the low cost that they risk little, but the opposite can be true.

As it is well known, higher risk means greater reward and just as equally greater losses. As is often quoted, "diversify" Ask yourself if you take this risk can you afford to loose that money? The inability to research these companies makes for a shot in the dark. If so then the rest is simple.