Profile: OTC Markets Group Inc (OTCM.PK)
21 May 2019
OTC Markets Group Inc., formerly Pink OTC Markets, incorporated on April 14, 1997, operates open, transparent and connected financial markets for over 10,000 United States and global securities. The Company, through OTC Link Alternative Trading System (ATS), links a diverse network of broker-dealers for the provision of liquidity and execution services for a range of securities. It organizes securities into markets to inform investors of opportunities and risks, including the OTCQX Best Market, the OTCQB Venture Market and the Pink Open Market. Its data-driven platform enables investors to trade through the broker of their choice. It shares information through open networks; connects broker-dealers; organizes markets and informs investors, and delivers subscription-based technology solutions. Its market data consist of real-time, delayed and end-of-day quotation and trading data, as well as security master data, company reference data and compliance data for OTCQX, OTCQB and Pink securities. OTC Link LLC is the subsidiary of the Company.
The Company has over three business lines, including OTC Link ATS, Market Data Licensing and Corporate Services. The Company provides various products and services, including trading technologies for Financial Industry Regulatory Authority, Inc. (FINRA) member broker-dealers; corporate services to issuers, and market data for broker-dealers, companies, investors and distributors. OTC Link ATS operates a subscription model with usage-based fees, Corporate Services charges application and annual fees.
OTC Link ATS
The Company's OTC Link LLC subsidiary operates OTC Link ATS. OTC Link ATS serves a diverse community of FINRA member broker-dealers that operate as market makers, agency brokers and ATSs, including electronic communication networks (ECNs). The Company offers a suite of quotation and trade messaging services that offer broker-dealers control of trades and choice of counterparties so they can provide execution, attract order flow and comply with FINRA, and Securities and Exchange Commission (SEC) regulations. Its QAP One Statement service allows brokers to charge and collect applicable access fees. Its network-based platform allows broker-dealers to directly trade with their peers. Broker-dealers pay monthly license, subscription and connectivity fees to use OTC Link ATS, and also use its OTC Dealer application as an interface into OTC Link ATS. Subscribers may also connect using Fixie, which is a real-time Financial Information eXchange (FIX) protocol-based computer-to-computer interface that allows for electronic submission and receipt of quotes, orders and negotiations, and can be integrated with the subscriber's order management system (OMS). OTC Link ATS delivers trade messages electronically, allowing subscribers to execute, negotiate or decline trade messages. OTC Dealer, together with separately priced add-on applications, shows a Real-Time Level 2 quote montage for OTCQX, OTCQB and Pink traded securities, providing access to OTC Link ATS tickers and multiple watch lists. OTC Dealer also provides users access to analytics and information, including corporate action data and advanced search capabilities for broker-dealer activity, quotes, inside markets and trades, security changes, and trader open/close activity.
The Company's broker-dealer subscribers pay variable usage fees to publish quotes in certain securities, and communicate and negotiate with counterparties on OTC Link ATS. The Company's daily quoting and trade messaging fees allow subscribers to make quote updates in a single security, and send and receive various trade messages in a single security on a given day.
Market Data Licensing
The Company provides its subscribers with access to the market data, company data and security information, which it collects through its OTC Link ATS and Corporate Services business lines. The Company's market data includes real-time, end-of-day, historical quotation, company financial, security master, corporate reference and compliance data for securities traded on its markets. Investors, traders, institutions, accountants and regulators pay the Company monthly market data license fees to access this information. It offers a suite of market data licenses, priced per enterprise or per user, through direct connectivity and third-party market data redistributors and OMSs. Depending on the license type, subscribers may distribute the market data on an internal-only basis, redistribute to clients or redistribute to the public.
The Company's markets offer companies a choice of disclosure standards in respect of the financial and operating information made publicly available, including SEC Reporting Standard, Regulation A Reporting Standard, Alternative Reporting Standard, Bank Reporting Standard and International Information Standard. Companies on the OTCQX market receive the OTC Disclosure & News Service, Real-Time Level 2 Quote Display and Blue Sky Monitoring Service. The OTCQX market is divided into OTCQX U.S. and OTCQX International. OTCQX for Banks, an expansion of the OTCQX market for the United States companies, is specifically aimed at meeting the needs of community and regional banks. There are approximately 80 banks from over 30 states traded on OTCQX. The OTCQX International market is targeted towards global companies that meet the listing standards of a qualified non-United States stock exchange in their primary market and do not see the value of meeting multiple regulatory, compliance, disclosure and accounting standards, and global emerging growth companies that are listed on a qualified non-United States stock exchange and may be working towards a United States exchange listing, but are not yet ready to deploy the management resources necessary to handle the operational complexity and cost burdens of meeting approximately two regulatory, compliance, disclosure and accounting standards.
The OTCQB Venture Market provides public trading for developing companies with standards that facilitate public disclosure. The OTCQB standards require companies to remain current in their reporting to the SEC or other applicable regulator, and to provide additional information to investors. These additional information requirements include management certifications that specifically identify company officers, directors, controlling shareholders and legal, accounting and investor relations advisors, and confirmation of total shares outstanding and total shares authorized. The OTCQB standards also include a minimum bid price test. In addition to its original base of SEC reporting companies and banks, the OTCQB Venture Market is open to international companies that trade in the United States in reliance on an available exemption from SEC registration, provide the information required by Rule 12g3-2(b) under the Exchange Act, and meet the applicable OTCQB standards. There are over 940 verified companies on the OTCQB market.
Pink companies are organized into one of three identifiable categories based on the amount, quality and timeliness of information made public by a company to its investors, including Pink Current Information, Pink Limited Information and Pink No Information. Pink companies provide public information to be categorized as Pink Current Information or Pink Limited Information either through a United States regulator, such as the SEC or a banking regulator, a qualified non-United States stock exchange, or directly to investors through the OTC Disclosure & News Service. For companies that provide disclosure under the Alternative Reporting Standard in accordance with its Pink Basic Disclosure Guidelines, it requires that the financial reports are audited by a public company accounting oversight board (PCAOB) registered audit firm, or that the company obtain a quarterly letter from a United States securities attorney stating that adequate current information is publicly available in accordance with Rule 144.
The OTC Disclosure & News Service allows public companies to communicate with the market and demonstrate their compliance with securities laws. Accessed through the www.otciq.com secure Web-based portal, the OTC Disclosure & News Service allows companies to post financial reports, news releases, videos, investor presentations and other investor communications on www.otcmarkets.com, and to distribute that information to market participants. The OTC Disclosure & News Service also serves as a document retention system, as all documents submitted through the service are stored and available to investors, regulators and market professionals. The OTC Disclosure & News Service allows companies to ensure that their information is distributed to and accessible by the broker-dealers trading their securities and market participants. It provides a data feed with company financial reports and news releases to market data distributors, financial databases and major financial portals. The OTC Disclosure & News Service allows companies to publish news through third-party newswire providers and have that news distributed to market participants and appear on the www.otcmarkets.com Website.
The Company's Level 2 quotes are professional level market data, consisting of a montage of real-time inside bid and ask quotes, a depth-of-book quote montage and trade data. Companies may provide their investors with access to free real-time level 2 quotes for their securities on www.otcmarkets.com. This service also permits companies to display quotes on the investor relations portion of their corporate Websites. Its Blue Sky Monitoring Service Compliance with state Blue Sky requirements allows brokers and investment advisors to discuss, recommend, solicit, or purchase securities for managed portfolios. The Blue Sky Monitoring Service provides analysis, review and guidance to companies regarding compliance with each state's Blue Sky laws. This service provides an overview of companies' compliance with or exemption from State Blue Sky requirements; guidance regarding additional information, filings or registrations required in states for which they are not qualified or exempt, and distribution of a company's Blue Sky information to broker-dealers and clearing firms around the country to assist with their Blue Sky compliance.
The Company operates various Websites, each targeting specific market participants, such as traders, companies and investors. The Company's Websites provide a range of information about its markets and the issuers of OTCQX, OTCQB and Pink securities. Its Websites include www.otcmarkets.com and www.otcdealer.com. www.otcmarkets.com is designed for retail and institutional investors, as well as the public, to provide financial and corporate information for OTCQX, OTCQB, and Pink securities. Its Website provides free delayed and real-time quotes, trade data, company profile and corporate action information, financial news and reports for these securities. www.otcdealer.com is a site providing technical support and training for OTC Dealer subscribers.
The Company competes with Nasdaq, NYSE, LSE and TSX.
OTC Markets Group Inc
304 Hudson St
NEW YORK NY 10013-1015