The SEC’s proposed amendments to Rule 15c2-11 focus on ways to incentivize additional company disclosure in the public markets. While we strongly support the overall goals of the proposed amendments to increase information availability for investors, we are mindful that this rule has far reaching implications that will reduce market efficiency in certain areas. Continue reading “Exploring the Investor Impact of an SEC Rule Proposal”
Oscar Wilde once wrote that “Everything popular is wrong.” He was describing our natural tendency to find comfort with well-established people and widespread ideas. Regulators, faced with the opportunity to open markets to alternative choices, hear a chorus of respected voices resistant to change. The SEC took until the year 2000 to repeal Rule 390—the rule that gave the New York Stock Exchange a monopoly in trading Blue Chip securities. The principles of open, transparent and connected public markets prevailed.
We raise this as the old idea underlying Rule 390, centralization of trading, is now being pushed as a popular fix for small company liquidity and capital formation. Of course, individual traders are determined to make trades in many different places, which means government intervention would be required to force stock trading back onto the largest stock exchanges. Rent-seeking regulations are often cloaked in the language of “reform” and the public good.
Quality data is essential to well-functioning markets. Improving the availability, relevance and usefulness of data aligns with OTC Market Group’s mission to create better informed, more efficient financial markets. In our experience, short selling remains one of the most highly-debated topics among academics, companies, investors, market makers and broker-dealers. As a market operator and company CEO, I believe it’s critical to address the misconceptions that still exist around short sale data and the correlation to a stock’s fundamental value.
Short selling, the sale of a security that the seller does not own, has long been a controversial practice in public markets. Advocates for short selling believe it builds price efficiency, enhances liquidity and helps improve the public markets, while critics are concerned that it can facilitate illegal market manipulation and is detrimental to investors and public companies. Given the diverse range of opinions and opposing views, we believe the first step is to take a deeper dive into the data and help separate out the noise.
Barriers of Entry to Equity Market Financing for SMEs
Earlier in 2017, The World Federation of Exchanges (WFE) released their report highlighting major barriers of entry to equity market financing for Small and Medium Enterprises (SMEs). In conjunction with a survey infrastructure supported by the Milken Institute, the WFE made three key recommendations to securities market regulators and exchanges: Continue reading “Three Strong Points for SME Markets”
In a previous blog post, I talked about some of the “pains” associated with a being an exchange-listed company today. Not only does it cost $2.5 million to do an IPO onto a U.S. exchange, it costs on average $1.5 million per year in legal, accounting, advisory and compliance costs to maintain an exchange listing, according to a 2011 study by the IPO Task Force. Continue reading “How Can We Take the Pain Out of Being Public? Part II”
If we want growing companies to go public, we need our public markets to be a competitive source of growth capital. One easy solution is to let public companies sell their shares in the same way they can now buy them back: through brokers directly into their established public markets. Removing the outdated restrictions on selling shares publicly will lower the cost of capital and attract more growth companies to our markets.
A key driver of the American economy is the capital formation process that fosters innovation and new enterprises. Entrepreneurs raise capital to grow their business, innovate and create jobs. For many smaller companies, the expectation is to conduct an Initial Public Offering (IPO) and list on a stock exchange – hoping to build liquidity and visibility, and ultimately, long term shareholder value. Continue reading “How Can We Take the Pain Out of Being Public?”