OTC Markets Gains Companies, Loses Volume
March 7, 2013
OTC Markets Group had an up and down year in 2012.
The operator of three different electronic markets for trading in roughly 10,000 over-the-counter stocks saw the number of firms signing up grow, but trading volume drop.
The good news: The OTCQX marketplace, OTC’s highest-quality marketplace, grew 27% last year, adding 86 companies for a total of 400 companies.
OTCQX also had a total dollar volume of $22.9 billion in trading in 2012. That accounted for nearly 17% of the total dollar volume of trading in all three of the group’s markets, which also include OTCQB and OTC Pink. The volume on QX is a 60% increase from 2011.
Additionally, the number of American Depositary Receipts (ADRs) and foreign ordinary shares traded on the OTCQX, OTCQB and OTC Pink marketplaces increased 412 to a total of 3,083, as of December 31, 2012. These shares of international companies accounted for 77% of the total dollar volume of trading in OTCQX, OTCQB and OTC Pink securities last year.
On the downside, the total dollar volume of trading on OTCQX, OTCQB and OTC Pink declined 41% to $135.6 billion amid lower trading volumes across all U.S. equity markets in 2012.
“While 2012 was a challenging year for the equity markets, we continued to make progress in growing the OTCQX marketplace,” said R. Cromwell Coulson, President and CEO of OTC Markets Group. “More companies are seeing the value of OTCQX for providing their investors with a high-quality experience when they analyze, value and trade their securities.’’
To be traded on the OTCQX market, both international and domestics companies undergo a qualitative review by OTC Markets Group. They are not required to be report results to the Securities and Exchange Commission, but must post financial information with OTC Markets. In addition, no shell companies are allowed and each issuer has to be sponsored by an approved investment bank or law firm.
“In 2013, we plan to continue growing our OTCQX marketplace and expanding our data network with new redistributors,” said Coulson. “In addition, as the JOBS (Jumpstart Our Business Startups) Act rules are implemented, we anticipate more companies will raise equity capital that can be traded on our marketplaces, creating visibility for companies and liquidity for their investors.”
“Data redistribution means we are distributing real-time Level 1 and Level 2 (pricing and trading information) on securities on our marketplace to more companies that are then sharing that data with their users, i.e. investors,” said Saskia Sidenfaden, the Group’s director of corporate communications. “For example, we provide our real-time data to Bloomberg, Reuters and many of the other data platforms which then, in turn, provide that data to their investor subscribers