Does Fidelity do penny stocks?

A clear, up-to-date guide: yes — Fidelity permits trading certain penny stocks (exchange-listed low-priced shares and a limited set of OTC/pink-sheet names) but requires disclosures, account author...

2026-01-22 08:18:00

By Ravi Clark

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Does Fidelity do penny stocks?

Short answer: Yes. Fidelity allows customers to trade penny stocks — including low-priced shares listed on major exchanges and a limited subset of over-the-counter (OTC) / pink-sheet securities — but trading is subject to a required risk acknowledgement, account eligibility settings, and platform or settlement limitations.

This guide explains in plain language what a penny stock is, how Fidelity treats penny-stock trading, how to enable authorization, the types of penny stocks you can trade at Fidelity, fees and settlement points to watch, research and execution tools the broker offers, key risks and regulatory notes, practical tactics to trade more safely, broker comparisons and FAQs. If you want a step-by-step practical read that connects policy, risk, and execution, this article will walk you through what to expect when asking "does fidelity do penny stocks" and what to do next.

Note: This article is informational only and does not constitute investment advice. Always consult Fidelity’s official documents for the latest account requirements and fee disclosures.

Definition — what is a “penny stock”?

The phrase "penny stock" is used in everyday investing and by regulators, but its meaning can vary depending on context. Here are the common definitions to help you understand how brokers like Fidelity classify and handle them.

Regulatory/SEC-oriented definition: Under U.S. regulatory guidance (including Rule 3a51-1 interpretations), a penny stock generally refers to a non-exchange-listed equity security trading below $5 per share. The SEC’s framework focuses on higher-risk characteristics and heightened disclosure requirements for certain small, low-priced securities.
Market/retail usage: Traders and commentators often call any stock trading under $1 or under $5 a penny stock. In retail conversation, the term sometimes implies an OTC/pink-sheet security rather than an exchange-listed company.
Exchange-listed vs OTC/pink-sheet distinction:
- Exchange-listed low-priced stocks: Shares of companies listed on the NYSE or NASDAQ that happen to trade below $5. These companies are subject to exchange listing standards and periodic reporting (e.g., SEC filings), although lower-priced listed names often have smaller market caps and thinner liquidity.
- OTC / Pink Sheet / OTCBB securities: Largely unlisted issuers that trade on over-the-counter venues. OTC issuers range from legitimate microcaps with limited operations to shell companies and extremely thinly traded names. OTC stocks commonly have far less public disclosure and higher operational risk.

Understanding these distinctions helps answer the practical question: does fidelity do penny stocks? The answer differs depending on whether a penny stock is exchange-listed or an OTC/pink-sheet name.

Fidelity’s policy on penny-stock trading

Fidelity permits trading in penny stocks but treats them with extra caution. Key elements of Fidelity’s approach include:

Required penny-stock disclosure and acknowledgement: Before you can buy or sell certain penny stocks, Fidelity typically asks customers to read and acknowledge a penny-stock risk disclosure. This requirement is intended to ensure retail investors understand higher risks such as low liquidity, wide spreads, and limited public information.
Default settings and enabled access: Penny-stock trading may be disabled by default in some accounts. Customers often must enable OTC/penny access by signing the required agreements in their account settings or by contacting Fidelity support.
Selective OTC coverage: Not every OTC/pink-sheet symbol is tradable at Fidelity. The brokerage maintains a list of OTC securities it will accept for trading and settlement. Some OTC names are restricted due to regulatory concerns, operational settlement issues, or internal risk rules.
Additional controls and limitations: For certain penny-stock transactions, Fidelity may require stricter order types (for example, limit orders), impose special margin or settlement rules, or disallow specific routing methods for execution.

As of 2024-06-01, according to Fidelity’s help resources and customer disclosures, these policies are applied to help ensure customers understand the nature of low-priced securities and that trading follows broker-dealer compliance procedures. This operational posture answers the direct consumer question "does fidelity do penny stocks" with the nuance that permission and disclosures are necessary.

How to enable/authorize penny-stock trading on a Fidelity account

If you want to trade penny stocks at Fidelity, here’s a step-level summary of the typical process. Procedures may vary slightly by account type and over time, so always check Fidelity’s current materials or contact support.

Log into your Fidelity account (website or mobile app).
Go to account services, settings, or trading permissions. Look for items labeled OTC trading, penny-stock trading, or a penny-stock risk disclosure.
Read the penny-stock risk disclosure and any related materials carefully. The disclosure explains liquidity, spread, and fraud risks.
Electronically sign or acknowledge the penny-stock disclosure/agreement. In some cases, you may need to complete a short questionnaire to confirm you understand the risks.
If OTC/penny trading remains disabled after completing the disclosure, contact Fidelity customer service or your representative to request enabling of OTC or penny-stock trading privileges.

Some third-party guides and video tutorials illustrate these steps; however, always rely on Fidelity’s official on-screen forms and the broker’s support if you encounter problems. When reviewing the process, keep in mind that certain account restrictions (for example, margin eligibility or account type) can affect whether penny-stock trades are permitted.

Types of penny stocks available at Fidelity

Fidelity’s tradable penny-stock universe generally falls into two categories:

Exchange-listed low-priced stocks
- Stocks listed on NASDAQ, NYSE, or NYSE American that trade under $5 per share (or another retail threshold) are usually tradable like any other listed security. These companies must meet exchange listing and reporting standards, which typically provide more public information than OTC issuers.
Selected OTC securities (OTCBB / OTC Pink / Pink Sheets)
- Fidelity accepts a limited subset of OTC symbols for trading. Availability is subject to internal review, regulatory status, and operational settlement compatibility. Many OTC pink-sheet names — especially those with very low shares outstanding, non‑DTC settlement status, or questionable disclosure — are often restricted or unavailable.

Not every OTC symbol you see on an external quote board will be tradable at Fidelity. If a particular OTC ticker is important to you, confirm tradability via the Fidelity platform or customer support before attempting a trade.

Fees, commissions, and settlement considerations

Understanding cost and settlement is essential when evaluating penny-stock trading at Fidelity.

Commissions: Fidelity’s commission schedule for U.S. online equity trades historically moved to $0 for many common stock and ETF trades. That $0 commission approach typically applies to NMS-listed stocks and may apply to many OTC trades performed online. However, fee structures can change and certain special trades or manually handled transactions may incur charges.
Additional fees and exceptions: Some securities carry special handling fees. Examples include non‑DTC eligible securities that require manual settlement, foreign tax or transfer fees on cross-border names, or overnight financing charges for margin positions. If a penny stock requires manual processing or is in a special settlement category, extra costs can apply.
Settlement and DTC eligibility: Settlement mechanics matter. Many large brokers rely on the Depository Trust Company (DTC) to settle trades. Some OTC/penny securities are not DTC-eligible, meaning settlement requires certificate movement or manual processes that can delay delivery, raise costs, or create settlement risk. Verifying DTC eligibility is prudent if you plan to hold or transfer the position.
Spread and execution quality: Low-priced and thinly traded names often have wide bid‑ask spreads. That implicit cost (the spread) can exceed explicit commission savings. Using limit orders and monitoring order execution quality can reduce slippage.

Always review Fidelity’s current fee schedule and trading disclosures. As policies and fee schedules change periodically, direct consultation of the broker’s official disclosures is the single best way to verify current costs.

Trading platforms and tools Fidelity offers for penny‑stock investors

Fidelity provides several research and execution tools that can be useful when dealing with lower-priced names. Expect varying quality of data between exchange-listed names and OTC issuers.

Fundamental research and filings: For exchange-listed penny stocks, Fidelity’s research dashboards present SEC filings, analyst commentary, financials, and news. OTC issuers commonly have sparser filings and less third-party research.
Screeners and filters: Fidelity’s stock screener allows filtering by share price, market cap, and exchange. You can screen specifically for low-priced listed stocks, but OTC filtering may be limited.
Fidelity Trader+ and Active Trader Workstation: Advanced order entry, charting, and routing features are available for active traders seeking finer control. Some advanced platforms provide conditional orders and faster market data feeds that can be valuable when dealing with volatile, low-liquidity names.
Mobile app: Fidelity’s mobile app supports order entry, account management, and research on the go. The app includes order protections like limit orders and order previews to show estimated execution prices.
Third‑party and premium research: For deeper microcap or OTC research, third-party subscription sources may be necessary. Be aware that OTC issuer data quality varies widely.

Note: Data depth and research coverage for OTC/pink-sheet securities are often limited compared with exchange-listed companies. That limitation increases the importance of independent due diligence.

Risks and regulatory issues with penny stocks

Penny stocks carry elevated risk compared with well-covered, highly liquid listed equities. Key risks include:

Low liquidity: Thin order books mean your order may move the market, and large orders can be difficult to execute without significant price impact.
Wide bid‑ask spreads: The difference between what buyers pay and sellers receive can be substantial, creating an implicit trading cost.
Limited public information: OTC issuers may not file the same level of audited financial statements or timely disclosures as exchange-listed companies.
Volatility: Price swings can be extreme, increasing both upside and downside potential but also the probability of rapid loss.
Fraud and pump‑and‑dump schemes: Penny stocks, especially on OTC venues, are disproportionately targeted for manipulation. Regulators have issued repeated warnings about fraudulent schemes in low-priced securities.
Settlement and transfer risk: Non‑DTC securities and manual settlement processes introduce operational risk and potential delays in transferring or selling holdings.

Fidelity’s penny-stock disclosure requirement is partly designed to ensure customers are aware of these risks. Clarifying this helps investors make informed decisions rather than impulsively trading low-priced names.

Regulatory definitions and protections

SEC role: The SEC’s rules and investor alerts frame penny-stock risks and impose certain broker-dealer obligations. For example, broker-dealers must comply with suitability obligations and may be required to document certain penny‑stock transactions.
Reporting differences: Exchange-listed issuers file regular periodic reports with the SEC, while many OTC issuers either file less frequently or have differing disclosure standards. These differences affect transparency.
SIPC protection: Cash and securities in a Fidelity brokerage account are typically protected by SIPC up to applicable limits against broker-dealer failure. SIPC does not protect against market losses or fraud by the issuer. SIPC coverage is not a cure for the fundamental risks associated with penny stocks.

As of 2024-06-01, according to SEC investor alerts and broker disclosures, regulators continue to emphasize caution with OTC and penny stocks due to persistent risks of fraud and manipulation.

Practical trading considerations and best practices on Fidelity

If you decide to trade penny stocks at Fidelity, adopt practical safeguards and execution tactics to manage risk and operational headaches.

Use limit orders: Never rely on market orders in thinly traded names. Limit orders control execution price and avoid unexpected fills across wide spreads.
Confirm tradability beforehand: Verify that the symbol is accepted for trading by Fidelity and check DTC eligibility and any manual handling requirements.
Watch liquidity metrics: Check average daily volume and depth of book. A stock trading 10,000 shares per day will behave very differently from one trading 100 shares per day.
Size positions conservatively: Because volatility and downside risk are high, restrict allocation per position and consider position-sizing rules to limit losses.
Be prepared for settlement delays: For non-DTC securities, expect longer hold times or manual processing when transferring or clearing trades. This can affect ability to quickly exit.
Conduct extra due diligence: For OTC issuers, read available filings, research the company’s business model, management disclosures, and any short interest or regulatory notices.
Avoid chasing thin momentum: Rapid price spikes in microcap names can be signs of market manipulation. Be skeptical of unsolicited promotional material and verify independent sources.
Use alerts and monitoring: Set order and price alerts in Fidelity’s platform to track executions, spikes, or sudden spread widening.

Following these practices will not eliminate risk, but they reduce avoidable execution errors and help align trades with the investor’s risk tolerance.

Comparisons and alternatives

If you are evaluating the question "does fidelity do penny stocks" as part of choosing a broker, here are comparison points to consider when looking at alternatives:

OTC symbol inventory: Brokers differ in the range of OTC/pink-sheet symbols they support. If access to a specific OTC ticker matters, verify that the broker supports it.
Fee and manual handling policies: Some brokers may charge handling fees for non-DTC trades or require paper processing. Check each broker’s fee schedule.
Research and data depth: Larger brokers with more research resources often provide superior data for exchange-listed penny stocks, but OTC coverage may still be limited.
Platform features: Active traders may prefer brokers with advanced order types, faster routing, and more granular charting.
Execution quality and routing: Execution quality matters for thinly traded names. Ask brokers about typical liquidity and order routing practices for OTC and low-priced stocks.

If your interest is in cryptocurrencies or Web3 assets rather than traditional penny stocks, consider specialized crypto platforms and wallets. For Web3 custody and trading needs, Bitget and Bitget Wallet are recommended within this content environment as tailored solutions for digital-asset activity and decentralized access.

Frequently asked questions (short Q&A)

Q: Do I need a special account to trade penny stocks at Fidelity? A: Generally no special account type is needed, but you must acknowledge and sign Fidelity’s penny-stock (OTC) risk disclosure and may need to enable OTC trading permissions in account settings.

Q: Are fractional shares supported for penny stocks? A: Fractional shares are typically offered for NMS exchange-listed securities in many brokerages; fractional trading generally does not apply to OTC pink-sheet stocks.

Q: Are all OTC pink-sheet stocks tradable at Fidelity? A: No. Fidelity accepts a subset of OTC symbols. Not every OTC ticker will be tradable due to internal risk, settlement, or regulatory restrictions.

Q: Will I be charged commissions to trade penny stocks at Fidelity? A: Many U.S. equity trades are eligible for $0 commission under Fidelity’s standard online equity pricing, but exceptions exist. Confirm the current fee schedule for special handling fees.

Q: What protections exist if a broker fails while I hold penny stocks? A: Securities and cash at a registered brokerage are typically protected by SIPC up to specified limits in the event of broker insolvency. SIPC does not protect against issuer loss or fraud.

Final thoughts — next steps and where Bitget fits in

If your core interest is trading U.S. penny stocks, asking "does fidelity do penny stocks" is a valid first question. Fidelity does permit trading of many low-priced, listed stocks and a limited set of OTC/pink-sheet names — but you must acknowledge disclosures and may need to enable permissions. Confirm tradability, order types, and any special fees before placing trades.

If you are exploring digital assets or Web3-native instruments rather than traditional penny stocks, consider using dedicated crypto platforms and custodial solutions. Within this environment, Bitget and Bitget Wallet are positioned to support crypto trading and custody needs with tailored tools for digital-asset users.

To act now:

Check your Fidelity account trading permissions and complete any penny-stock disclosures if you intend to trade OTC names.
Use limit orders, conservative sizing, and thorough due diligence on low-priced issuers.
Compare broker OTC inventories and fee schedules if you need specific OTC access.
For crypto-focused activity, explore Bitget’s trading suite and Bitget Wallet for Web3 interactions.

Explore more content to learn how order types, settlement rules, and broker policies can materially affect execution outcomes when trading penny stocks.

The content above has been sourced from the internet and generated using AI. For high-quality content, please visit Bitget Academy.