What is OTC Markets Group Inc.?
OTC Markets Group is the owner and operator of the largest electronic trading and trading system in the US for over-the-counter (OTC) securities. Provides markets to trade over 11,000 OTC securities.
The company provides services in three core areas that are essential for better informed and more efficient financial markets. The fields are Business Services, Market Data, and Corporate Services.
OTC Markets Group was preceded by the National Quotation Bureau which was founded in 1904. Before being called OTC Markets Group Inc., the National Quotation Bureau renamed itself Pink Sheets LLC in 2000 and then Pink OTC Markets Inc. in 2008 The change to the name of OTC Markets Group came in 2011.
- OTC Markets Group is the largest OTC stock market in the US with over 11,000 securities listed as of 2021.
- OTC securities are listed in three tiers: OTCQX, which has the strictest listing requirements, OTCQB, which is the risk market, and Pink Open Market, which includes companies in financial distress or bankruptcy.
- Of the three levels, the Pink Open Market is the largest in terms of number of companies and trade volume.
Understanding of OTC Markets Group Inc.
The handling of most OTC securities transactions in the US is done on the company’s OTC Link platform, an alternative trading system registered with the Securities and Exchange Commission (SEC) as a broker-dealer. OTC Markets Group is based in New York City and is listed on the OTCQX market under the symbol OTCM.
Through the trading services division, OTC Markets Group connects brokers, providing the liquidity and infrastructure to execute operations in the OTC market.
The Market Data division provides data and trading services for more than 11,000 OTC securities.
The Corporate Services division helps companies go public and gain greater visibility through listing on one of the three OTC tiers of the OTC Markets Group.
Structure of levels of the group of OTC markets
The most visible aspect of OTC Markets Group management is the breakdown of the OTC market into three levels, based on the quality and quantity of information and disclosures from listed companies. This tiered structure provides different levels of transparency, so investors know what information they have and what they don’t have for each company they want to trade.
- OTCQX is the top tier of the three markets for OTC stock trading. Stocks listed on this forum must meet stricter qualification criteria compared to the other tiers. Also called the Best OTCQX Market, it includes a host of top stocks from Europe, Canada, Brazil and Russia. These big foreign stocks are often household names around the world. Penny stocks, shell companies, and bankrupt companies cannot qualify for a listing on the OTCQX.
- The intermediate tier is called OTCQB, also known as “The Venture Market,” which consists of early-stage and developing US and international companies that cannot yet qualify for the OTCQX. The business must be current on its reports, undergo an annual verification, a management certification, meet a $ 0.01 test of offer, and cannot be bankrupt to meet eligibility standards. The companies listed here report to a US regulator such as the SEC or the Federal Deposit Insurance Corporation (FDIC). The OTCQB replaced the OTC Bulletin Board (OTCBB) operated by the Financial Industry Regulatory Authority (FINRA) as the main market for trading OTC securities that report to a US regulator. Since it has no minimum financial standards, the OTCQB includes shell companies, penny stocks, and small foreign issuers.
- OTC Pink, or Pink Sheets, is the lowest level and the most speculative level of the three markets for OTC stock trading. This market offers operations in a wide range of stocks and includes companies in default or financial difficulties. Since it has fewer disclosure requirements, the classification of OTC Pink companies is based on information provided by the company. Please note that effective September 28, 2021, OTC Pink (as well as all other OTC Markets Group lines) will require platform companies to provide updated disclosures, in accordance with SEC Rule 15c2-11 .
OTC Markets Group Inc. trading statistics
With over 11,000 securities listed by OTC Markets Group as of April 2021, the daily trading volume fluctuates. The dollar trading volume generally exceeds $ 1 billion per day, the stock volume will often reach five billion or more, and the number of trades will often be above 150,000. These statistics are for all three levels combined.
The OTC Pink is the largest tier in terms of the number of companies listed on it. It also usually accounts for around 70% of the daily trading volume mentioned above.