What is the OTC Markets Group Inc.?
The OTC Markets Group Inc. reigns as the leading U.S. inter-dealer electronic quotation and trading system owner for over-the-counter (OTC) securities, offering marketplaces for trading over 11,500 OTC securities.
Key Insights
- OTC Markets Group Inc. is the preeminent U.S. marketplace for OTC securities, listing more than 11,500 securities as of 2022.
- It specializes in three core areas: trading services, market data, and corporate services.
- OTC securities are segmented into three tiers: OTCQX with stringent listing prerequisites, OTCQB catering to the venture market, and the Pink Open Market featuring financially-distressed companies.
- The Pink Open Market leads in the number of listed companies and trading volumes among the three tiers.
- The majority of OTC securities trading in the U.S. operates on the OTC Link platform, registered with the SEC.
Delving Into OTC Markets Group Inc.
OTC Markets Group Inc. extends its services across three pivotal areas essential for cultivating well-informed and efficient financial markets: trading services, market data, and corporate services.
Through trading services, the group connects broker-dealers, providing the necessary liquidity and infrastructure to execute OTC market trades. Their market data division disseminates crucial quotes and data services for over 11,500 OTC securities. The corporate services division elevates companies’ visibility by assisting them to go public and listing in one of the three OTC tiers.
Badged with a storied legacy, the company emerged from the National Quotation Bureau founded in 1904, evolving through various name changes to its present moniker in 2011.
Most OTC securities trades in the U.S. utilize the firm’s OTC Link platform, an SEC-registered alternative trading system. Publicly traded on the OTCQX marketplace under symbol OTCM, OTC Markets Group Inc. is headquartered in New York City. As of March 7, 2022, the firm’s combined market movements amounted to a dollar volume of $219 million and a share volume of $1.4 billion.
OTC Markets Group Inc. Tier Structure Explained
The group’s tiered structure represents its most visible distinction, stratifying the OTC market into three levels to reflect the quality and disclosure levels of listed companies.
Tier 1: OTCQX
OTCQX stands as the apex of the three-tier system. Companies listed here meet heightened qualification standards and typically include notable blue-chip stocks from Europe, Canada, Brazil, and Russia. Notably, penny stocks, shell companies, and bankrupt companies cannot list on the OTCQX.
Tier 2: OTCQB
OTCQB, also identified as the Venture Market, welcomes early-stage and developing companies globally that don’t yet qualify for the OTCQX. These companies must be diligent in their reporting with U.S. regulators like the SEC or FDIC, secure annual verifications, and meet specific financial standards such as the $0.01 bid test.
Tier 3: OTC Pink
OTC Pink represents the most speculative and least regulated tier. It features companies with varying levels of disclosure, some of which might be in distress or bankruptcy. As of September 28, 2021, all tiers, including OTC Pink, mandate up-to-date corporate disclosures in compliance with SEC Rule 15c2-11.
Clarifying OTCM’s Abbreviations and Leadership
What Does OTCM Stand for?
OTCM refers to the over-the-counter market, trading securities directly between parties without an intermediary exchange, and is often associated with OTC Markets Group who manages the OTC trading platform.
Who Leads OTCM?
OTCM navigates its operations as a publicly traded entity headquartered in New York, led by President and CEO Cromwell Coulson.
Stock Exchanges vs. The OTC Market
Unlike stock exchanges that amalgamate the buying and selling with an oversight framework enhancing liquidity and transparency, the OTC market captures securities trading directly between parties independently. Although the OTC market entails more risks owing to limited information and liquidity, selecting solid financial ground companies among the sturdy OTC tiers diminishes these risks.
Listing Process in The OTC Market
For a company to list in the OTC market, it must secure a market maker sponsor. Market makers are pivotal as they propose a listing for public trade.
Related Terms: OTC trading, stock markets, alternative trading systems, broker-dealers.
References
- OTC Markets Group. “Our Company”.
- OTC Markets Group. “Information for Pink Companies”.
- OTC Markets Group. “Get Started: OTCQX & OTCQB”.
- OTC Markets Group. “Current Market”.
- OTC Markets Group. “2011 Annual Report”, Page 4.
- OTC Markets Group. “OTC Link ATS”.
- OTC Markets Group. “OTCM”.
- OTC Markets Group. “Contact Us”.
- OTC Markets Group. “Current Market”.
- OTC Market Group. “Stock Screener”.
- OTC Markets Group. “Market Snapshot”.
- U.S. Securities and Exchange Commission. “Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change to Adopt FINRA Rule 6439 (Requirements for Member Inter-Dealer Quotation Systems) and Delete the Rules Related to the OTC Bulletin Board Service”, Page 1.
- LinkedIn. “Cromwell Coulson”.
