OTC Markets Fundamentals

Jason Paltrowitz’s Interview with Edison’s
“Accessing the Global Capital Markets” Interview Series

EVP of Corporate Services for OTC Markets Group, Jason Paltrowitz joins Rachel Carroll – President, Managing Partner of Edison, to discuss our market structure and how OTC Markets Group provides an efficient, cost effective approach to accessing the U.S. Capital Markets. With over 20 years of cross-trading experience, Jason also provides recommendations to small cap companies looking to access the U.S. Capital Markets.

The 10,000 securities that trade on OTC Markets are segmented into the three tiers  – OTCQX, OTCQB and Pink. Jason explains in detail how the segmentation works and the function of each market tier, including how:

  • Pink is a Broker Market in which broker dealers can decide to trade a security based on demand from an investor
  • Issuers engage to have their security traded on the OTCQX & OTCQB Markets
  • OTCQX is the top tier with companies that meet the highest financial and governance standards
  • OTCQB is a Venture Market for early stage & developing companies

Companies that begin cross-trading on OTCQX on average see a two-fold increase* in U.S. ownership in the first year.  Additionally, there are many benefits of cross-trading on the OTCQX Best Market:

  • More cost-effective avenue for reaching U.S. investors
  • Decreased risk for a Foreign Issuer being able to leverage their existing reporting standards

Companies need to consider the differences between a company’s home market and the U.S. when embarking on a U.S. IR strategy. For example, the approach that works at home with a close broker relationship will likely not work in the U.S. given the size of the U.S. market.

Cross-Trading on OTCQX helps establish a company’s’ presence in the U.S. by:

  • Having a searchable U.S. ticker
  • Trading in U.S. dollars and during U.S. market hours
  • EDGARizing the company’s financials
  • Ensuring News Flow distribution to Bloomberg, CNN Money, MSNBC, etc.

Beginning to cross-trade on OTCQX is just the first step. Jason advises companies that if it makes sense to have a North American IR strategy– consistency is crucial. Trading on OTCQX also coincides with visibility services that help tell the company’s story, but it is essential to combine this with a well-thought-out IR strategy.

OTC Markets Group Inc. (OTCQX: OTCM) itself serves as a successful case study for the OTCQX Market.  In the past 10 years since OTC Markets went public, the company has leveraged IR principles shared in this interview to grow itself from a sub $50 million to an over $400 million market cap company today.

Visit https://www.otcmarkets.com/ to learn more about OTC Markets Group; how our markets work; how dealer markets work; ATSs vs. an Exchange; and learn about trading on our markets.

*Recent Study by Oxford Metrica

Our Guest Contributor section features articles, thought pieces and blog posts from industry experts on capital markets topics. Articles are reposted with permission.

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