Are you from Canada and interested in trading Pinksheet/OTC Stocks? Read this, if your from the US this has nothing to do with you.
If you are like me, and if you have done your research you will know that most Canadian brokerages don't allow trading of Pinksheet/OTC stocks, and most of the ones that do, have a string of restrictions on them. Some only allow you to purchase 500k per order, others will 'review' your order if you are purchasing over 1million shares which takes 3-10 minutes, and most make you phone in to purchase and sell these stocks which makes it impossible to day trade.
The first thing you need to know is that as a Canadian you are not allowed to register for any US online brokerages. So right away that option is gone. It's kind of funny that people from France, Italy, etc. can sign up but Canadians can't.
The second thing you need to know is Pinksheet/OTC stocks are not allowed to be traded in TFSA's. It is illegal. The government has made it this way, most likely to discourage people from trading such stocks because of the manipulation/scams in this market.
As for online brokerages, I practically know all of them in Canada. You don't need to worry about that though. I will break down which ones allow you to properly trade them.
Questrade - This online brokerage lets you buy/sell them online, however, if you purchase over 1million shares it goes to a 'review', which usually takes from 3 minutes, sometimes up to 5 minutes. This may not bother you at first when you have a smaller portfolio but once you expand it will make daytrading almost impossible. (I used this brokerage for about 9 months)
NBDB (National Bank Discount Brokerage) - This is the one you want to look at, amazingly, it is the ONLY Canadian online brokerage that lets you freely, without any restrictions on Pinksheet/OTC stocks. It is one of the 'Big Five Banks' in Canada so your money is obviously safe here. However, for people who don't trade a lot the commission is a bit large at $29.99 a trade. If you have a smaller portfolio you may want to start with Questrade ($9.95/trade) and then migrate to NBDB once you expand your portfolio. Check their website to see the exact commission for inactive traders. To become active trader you need minimum 30 trades in a quarter. Active trader commissions are $6.95-$9.95(maximum) which is extremely competitive and very, very good.
Don't even worry about the other Canadian online brokerages, don't waste your time checking them as I have done so already. But for those who insist..
RBC- allows trading of pinks/otc but maximum shares per order is 2.5mil
TD Waterhouse- You have to call in to trade them
BMO- This brokerage says you can trade them freely with no restrictions but I have not tried them out
Credential direct- Review process so you're order will not reach market until they review and accept it
Disnat- Similar story here, maximum amount of penny stock you can have is 400,000 shares
There are too many to list but I've checked them out..
I really hope this helps any Canadian traders out there and saves them the time. I had to research for quite some time to find the ones that are best with Pinksheet/OTC stocks as there was never anything online I could find that discussed trading Pinksheet/OTC stocks with Canadian brokerages, I hope this saves a lot of people a lot of time.
Edited by Royal - 4/20/11 at 11:28am