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I have noticed that many "zero commission" US stock brokerages either do not allow trading in OTC stocks, or otherwise charge a commission to do so. For example, Robinhood has a very limited selection of OTC stocks (mostly ADRs of large foreign companies such as Nestlé, Tencent, Adidas, etc.). TD Ameritrade charges $6.95 per OTC stock transaction. Other brokerages simply disallow the buying and selling of OTC stocks altogether. There are some brokerages such as Schwab and Fidelity that have free OTC trades, but the overwhelming majority of other firms either disallow OTC trades, or charge a commission.

Is there a fundamental reason for the lack of support for OTC stocks among zero commission brokerages in the US? Is it because they are unable to make money by handling their clients' OTC stock orders? If so, what is there in the OTC market that makes it difficult for zero-commission brokerages to make money?

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  • Who's going to pay for that if you want zero commissions and the stock is some barely liquid pink sheet?
    – littleadv
    Sep 22 at 3:11

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