If your company trades on the OTCQX or OTCQB Market, a new financing tool for SEC reporting companies that most have not been able to use in practice, is coming within reach. The SEC has proposed changes to at-the-market offerings, or ATMs: a way to raise capital by selling new shares gradually, into the existing market, at the price buyers are already paying, rather than in one large, discounted block. The SEC’s proposal names OTCQX and OTCQB as qualifying trading markets for ATMs and would expand access to capital through the shelf registration process and make ATMs available to a range of companies that could not use it before. Here is what an ATM is, how a company would use it, and what the proposal would mean for issuers on our markets.
What is an ATM and how does it work
An at-the-market offering is a public sale of newly issued shares that a company makes on a continuous basis, straight into the stock’s existing trading market. The company does not set a price; the market does, and the price varies as the stock moves while the offering is open. Shares typically go out in amounts that stay modest against the stock’s daily volume, with no roadshow and no special selling effort.
An ATM provides a streamlined, cost-effective method of conducting a secondary capital raise. To use an ATM, a company first files a shelf registration on Form S-3, which lets a company register securities now and sell them later. Once the SEC declares the Form S-3 effective, the company enters into a sales agreement with a broker-dealer who passively sells those shares into the market as the company’s agent. From there, the company decides when to sell, how much, and at what minimum price, and can pause at any time.
The process is transparent. A company publicly announces the program on a Form 8-K when it signs the sales agreement, and reports the shares sold, the commissions, and the net proceeds at least quarterly, so investors can see the offering as it happens.
An ATM costs less than a traditional underwriting or private placement. The broker-dealer earns a regular brokerage commission, which is significantly lower than underwriter or selling agent fees, and there are not large discounts to market prices or fees on capital the company never draws. The main upfront cost is the legal and filing work to put the shelf registration in place, which utilizes the investment of being a SEC reporting company. Once effective, that shelf generally lasts about three years, during which the program can sit idle or be tapped whenever the company chooses.
Why it is worth it, and when to use it
Because shares sell at the prevailing market price rather than a negotiated discount, companies can raise more money with fewer shares. The public market sets the price for all to see. As compared to a private placement (stock sold privately to select investors) or an equity line (a committed facility a single investor funds over time), the contrast is sharper still: those deals often carry steep discounts and attached warrants, while an ATM prices in the open market, which gives a company real price discovery.
An ATM is less a single transaction than a standing facility. A mirror of how companies today can easily buy back their shares. Once the shelf and sales agreement are in place, the program sits ready to draw on as needs arise: funding a capital project in stages, paying down debt, building a cash cushion before a regulatory process, or raising while the share price is strong. Each sale can be matched to a real need, on a schedule the company sets.
What the SEC is proposing, and who it reaches
Our CEO, Cromwell Coulson, has long argued that efficient tools like ATM offerings should not be reserved for the largest public companies, leaving smaller issuers to raise capital privately, at a discount and with heavy dilution. (Building the Benefits of America’s Public Markets) The SEC’s proposal takes a concrete step in that direction, both expanding access to capital and lowering the cost of raising capital.
For most OTC Markets issuers, the barrier to an ATM has been Form S-3 itself, the shelf registration the offering runs on. Form S-3 has limited the ability of companies with a public float of less than $75 million to raise meaningful capital, and ATMs have been largely limited to companies with a U.S. exchange listing, which has left ATM offerings out of reach for many fully reporting companies on OTCQX and OTCQB.
Released on May 19, 2026 and now open for public comment, the SEC’s proposal does two things. First, it defines a qualifying “trading market” for purposes of an ATM (in amended Securities Act Rule 415(a)(4)) and, for the first time, names OTCQX and OTCQB as qualifying trading markets based on criteria that mirror the standards OTC Markets already applies: SEC reporting, a PCAOB-registered auditor, a minimum bid price, float and shareholder thresholds, trading volume, and the number of market makers. Lower OTC markets designations such as OTCID and Pink Limited are not included. Second, and more consequential for most issuers, it removes the $75 million float limitation from Form S-3, opening meaningful capital raising opportunities to reporting companies that are current in their filings and not otherwise ineligible.
Together, those changes point to a clear set of beneficiaries: SEC reporting issuers trading on OTCQX or OTCQB, including community banks and small-cap companies that disclose fully but have lacked a practical route to an ATM. The proposal would not extend to penny-stock, shell, or blank-check issuers, and it looks back three years at that history. For most OTCQX companies that is largely a non-issue, since OTCQX standards already exclude those categories. On OTCQB, where penny stocks are eligible, the look-back is worth a closer read, and a point for companies to raise during the comment period.
What to do now
Check your standing against the criteria. Current and timely SEC reporting, a PCAOB-registered auditor, bid price, float, shareholder count, and market makers. OTCQB companies should also review their penny-stock history.
Talk to your securities counsel. Preparing and filing an S-3 takes time, so starting now positions your company to move quickly if the rule is adopted.
Comment by July 27, 2026. OTCQX and OTCQB companies have an opportunity to weigh in. If the proposal would help your company, a comment on the record strengthens the case for adoption; if a provision creates an unintended barrier, this is the venue to say so. Comments go to rule-comments@sec.gov referencing File No. S7-2026-17, or through the Federal Register. OTC Markets Group is preparing its own comment letter and coordinating issuer input, so reach out if you would like to discuss your submission.
Additional Resources:
https://www.mofo.com/resources/insights/260527-sec-proposes-significant-registered-offering-reform
How ATMs work today (before this rule)
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