the transformation of otc markets has started
DESCRIPTION
I have called a ton of people today… all say the same thing, the BB market is going to be greatly diminished going forward…. here is the presentation OTC Markets just sent to me… powerful info inside….. Send to your friends. A transformation is upon us.-TobinTRANSCRIPT
January 2011
OTC Markets Group Inc.
2
Who we are
The Quality Controlled Marketplace
The U.S. Reporting Company Marketplace
The Speculative Trading Marketplace
OTC Markets Group operates the world's largest electronic marketplace for trading unlisted stocks. Our open network of competing broker-dealers provides investors with the best prices in over 10,000 OTC securities. We organize the OTC into three tiers:
so investors can identify the level and quality of information companies provide. Through innovative technology and exceptional customer service, our mission is to create a transparent and efficient world-class marketplace.
3
Our Network
• 160 Market Maker, Agency Broker, and ECN Broker‐Dealers competing on our platform to provide execution services for investors in unlisted securities
• Easy investor access through any U.S. broker‐dealer
• Seamless connectivity to broker‐dealer order management systems
• Real‐time prices and tiers on all major online brokers (E*Trade, TD Ameritrade, Schwab, Fidelity, Scottrade, etc)
• Distribution of prices and tiers through major market data vendors and financial portals
• With 800,000 visits and 24 million page views, www.otcmarkets.com is the central information source for investors interested in unlisted stocks
4
State of the OTC – 2010 Volumes
0
5
10
15
20
25
30
35
40
45
1st Qtr 2009
2nd Qtr 2009
3rd Qtr 2009
4th Qtr 2009
1st Qtr 2010
2nd Qtr 2010
3rd Qtr 2010
4th Qtr 2010
Bill
ions
Dollar Volumes have rebounded from Flash Crash hangover & OTC Link volumes continue to increase.
09-10 OTC Market Quarterly $ Volume
5
State of the OTC – FINRA’s BB
Overview
4,396 Priced Quotes
21 BB Only Securities
2,858 Dually Quoted Securities – Down from 3,149 in Q1 2010
1,667 BB securities with No Inside Price being created (< 2 priced quotes)
0
10000
20000
30000
40000
50000
60000
70000
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
OTC Markets FINRA BBPriced Quotes
4,396
61,652
December 2010 – 96.2% of OTC Trading Volume occurred in companies making current disclosure to investors.
6
State of the OTC – Trading By Tier
OTC Market Tier # Securities Monthly $ Vol. % of Total $ Vol.
OTCQX 159 $1,971,091,273 13.8%
OTCQB 3,851 $3,970,777,887 27.9%
OTC Pink - Current Information 1,830 $7,762,691,726 54.5%
OTC Pink - Limited Information 749 $339,886,184 2.4%
OTC Pink - No Information 3,375 $207,888,915 1.5%
FINRA BB Only 22 $14,545 0.0001%
Total Quoted OTC Market 9,986 $14,252,350,531
~3,300 securities only represented 1.5% of dollar volume. No Information = No Trading.
7
State of the OTC – Trading Across Alternative Marketplaces
Source: 30 December 2010, OTC Markets Group, TMX Group, LSE
Average $ Volume per Security measures marketplace liquidity.Average Trades per Security gauges the amount of investors participating in a marketplace.Average $ Amount per Trade is an indication of the types of investors participating in a marketplace.
Market#
Securities $ Volume Trade Count
Average $ Volume per
Security
Average Trades Per
Security
Average $ Amount per
Trade
OTCQX 159 $1,971,091,273 114,685 $12,396,800 721 $17,187
LSE AIM 1,194 $5,627,687,548 498,894 $4,713,306 418 $11,280
OTC Pink - Current 1,830 $7,762,691,726 610,890 $4,241,908 334 $12,707
TSX Venture 2,147 $4,588,986,695 1,243,502 $2,137,395 579 $3,690
OTCQB 3,851 $3,970,777,887 1,156,349 $1,031,103 300 $3,434
An Increasing Number of Globally Recognized Companies Trade OTCQX
8
OTCQX Offers Greater Visibility and Access
VisibilityTop Tier of the OTC MarketsHighest levels of trading activity & liquidity
Quality ControlFinancial StandardsQualitative Review Sponsorship by DAD/PAL
TransparencyReal-Time Level 2 QuotesEasy investor access to company
information & financial disclosure Access
Blue Sky Monitoring & AdvisoryBroker-dealer and investment advisor
compliance
9
More Open Reporting Options Than Traditional Exchanges
10
1. SEC Reporting Standard12(g) registered and reporting (files10Ks or 20Fs, etc.)
2. International Information StandardExempt from registration under 12g3-2(b) and files home country disclosure in English
3. Alternative Reporting StandardFor companies not required to file with the SEC that have fewer than 500 record holders and less than $10MM in assets.
DAD/PAL AdvisorsProviding Skilled Market Sponsorship and Advice
11
• DADs (Designated Advisor for Disclosure) sponsor U.S. companies on OTCQX.
• PALs (Principal American Liaison) sponsor non-U.S. companies on International OTCQX.
• Companies must be sponsored by a qualified investment bank, DR Bank (ADRS only) or attorney DAD/PAL to list on OTCQX.
• The DAD/PAL role is modeled after the Nomads on the AIM market, but built to work within the U.S. framework.
• OTCQX relies on the DAD/PAL community to sponsor credible and trustworthy companies while providing professional securities advice to the companies’ management.
OTC Market Segments Comparison
OTCQX OTCQB FINRA BB Pink
Qualitative listing standards NO NO NO
Listing agreement NO NO NO
Audited Current Disclosure Required
NO
SEC or US Banking Reporting Only
NO NO
Shells and distressed companies excluded
NO NO NO
FINRA regulated quotes
Broker-dealer drivenmarketplace
Electronic Marketplace NO
Services for Issuers NO
12
Upcoming OTC Market Structure Changes in 2011
• Access Fees• Limit Order Display• Market Order Protection• FINRA BB Closing Down• OTC Link Alternative Trading System (ATS)
13
14
Regulatory Changes – OTC Link
We are registering our OTC Link - Interdealer Quotation System with the SEC and FINRA to operate under Regulation ATS.
•Anticipation of approval is end of Q1•There will be no changes from the perspective of the Subscribers to our products and services
•Trading Services products will be provided by OTC Link ATS/BD•Subscribers will access the market place as they do now•The ATS is being created to act as a Regulated Interdealer Quotation System, not an ECN or Dark Pool