Learn what Over-the-Counter (OTC) securities are, why they carry unique risks, what your options are as an M1 client, and how to sell or liquidate OTC securities held in your account.
What are OTC securities?
OTC (Over-the-Counter) securities are financial instruments that are not traded on major U.S. stock exchanges (such as the NYSE or Nasdaq). Instead, they are traded directly between broker-dealers. Companies may trade OTC if they do not meet the listing standards of major exchanges, or are based outside the United States.
Common OTC securities include:
Large-cap American Depositary Receipts (ADRs)
Foreign ordinary shares
Small- and micro-cap growth companies
An ADR is a security that represents shares of a non-U.S. company and trades in the U.S. via a depositary bank.
What OTC securities does M1 Support?
M1 does not support buy orders for any OTC securities.
You cannot add OTC securities to new or existing Pies, nor can you purchase additional shares of OTC securities.
Sell and liquidation orders are supported: If you hold OTC securities in your account, you may sell or liquidate your positions.
Risks and limitations of OTC securities
OTC securities come with specific considerations and risks, including:
Lower liquidity: These securities may be harder to sell due to fewer buyers and sellers.
Less transparency: OTC companies are not subject to the same reporting requirements as exchange-listed firms.
Higher volatility and risk: Prices can be more erratic, making value less predictable.
Potential additional fees: Some brokerages charge extra fees for OTC trades. At M1, standard fees apply, but be aware that market conditions may impact trade execution and settlement timelines.
Potential for corporate actions: OTC stocks are more likely to undergo corporate actions, including delisting or reverse splits.
How to identify OTC securities in your M1 account
Log in to your M1 account on the web or mobile app.
Review your holdings—M1 will often display OTC securities “OTC” in the name or ticker.
If you are unsure if a security is OTC, search the ticker on a financial website or contact M1 Client Success for verification.
How to sell or liquidate OTC securities
Log in to your M1 account.
Navigate to the Invest tab and select the account holding the OTC security.
Locate the OTC security in your Pie or portfolio holdings.
Click or tap the security to open the detail view.
Select Sell.
Enter the desired amount you wish to liquidate (up to your full holding).
Submit your sell order.
Your order will be processed during the next available trade window, subject to market liquidity and trading conditions.
Note: If you experience issues or delays selling an OTC security—such as trading holds, limited liquidity, or administrative restrictions—please contact M1 Client Success for assistance.
Frequently asked questions
Can I buy or add OTC securities at M1?
No, M1 does not allow buy orders or new Pie additions for OTC securities.
Are there additional steps or fees for selling OTC securities?
Standard trading fees apply at M1. However, be aware that external liquidity and market conditions may impact transaction times. Some OTC trades may take longer to execute.
Why is my OTC sale delayed or not executing?
OTC markets may have limited liquidity. Sell orders may not fill immediately or can be delayed until a buyer is available.
What happens if an OTC security is delisted or halted?
You may be unable to sell, and the holding will remain in your account until trading resumes or another resolution is available. M1 will notify you of any relevant actions or changes.
Brokerage accounts on the M1 platform are either fully disclosed to APEX Clearing or cleared through M1 Finance LLC. Please look at your account statement to determine how your account is cleared.
All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future performance. Using margin can add to these risks. Users utilizing APEX cleared margin accounts should review the APEX margin account risk disclosure before borrowing. Users utilizing M1 cleared margin accounts should review the M1 margin account risk disclosure before borrowing. M1 Margin Loans are available on margin accounts with at least $2,000 invested per account. Not available for Retirement or Custodial accounts. Margin rates may vary.
Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC, and a wholly owned subsidiary of M1 Holdings, Inc.
This content was generated using artificial intelligence and is intended for informational and educational purposes only. While reasonable efforts are made to ensure accuracy, AI-generated outputs may omit key context; and should not be construed as financial, investment, legal, or tax advice. Users should independently verify all information and consult a qualified professional before making any financial decisions.
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