OTC Markets Group Strengthens OTCQX Market Standards and Adopts Best Practice Corporate Governance Requirements for OTCQX U.S. Companies

New OTCQX standards designed to elevate quality of OTCQX market and improve recognition among regulators and investors

Dec 14, 2015, 08:00 ET from OTC Markets Group Inc.

NEW YORK, Dec. 14, 2015 /PRNewswire/ -- OTC Markets Group Inc. (OTCQX: OTCM), operator of Open, Transparent and Connected financial markets for 10,000 U.S. and global securities, today announced it has adopted amendments to its rules for U.S. companies, community banks and international companies on its OTCQX® Best Market.  The rule changes, which become effective on January 1, 2016, raise the eligibility requirements for companies to trade on OTCQX to better align with established regulatory standards and exchange industry best practices.

The OTCQX rule changes do the following: 

  • Strengthen OTCQX financial standards, including a continuing penny stocks prohibition – OTC Markets Group has updated the initial and ongoing financial standards for all OTCQX companies, and has enhanced its current OTCQX rule that prohibits penny stocks, as that term is defined by the U.S. Securities and Exchange Commission (SEC), from qualifying for OTCQX by adding a continuing penny stock prohibition.  U.S. companies will be required to meet a higher initial bid price of $0.25 and new initial and ongoing market capitalization requirements of $10 million and $5 million to trade on the OTCQX U.S. tier.  The ongoing bid price requirement for OTCQX U.S. tier companies will remain $0.10. International companies will be required to meet new initial and ongoing minimum bid prices of $0.25 and $0.10 to trade on the OTCQX International tier, as well as higher initial and ongoing market capitalizations of $10 million and $5 million, respectively.  OTCQX U.S. tier and OTCQX International tier companies will be required to have at least two market makers with priced quotes on OTC Link® ATS within 90 days of joining.
  • Add corporate governance standards for U.S. companies and banks – OTC Markets Group has introduced new corporate governance standards for U.S. companies and banks based on common sense, best practice standards already followed by the majority of U.S. companies on OTCQX. These include:
    • A minimum of two independent directors on the board of directors;
    • An audit committee composed of a majority of independent directors;
    • Conduct annual shareholders' meetings and submit annual financial reports to shareholders at least 15 calendar days prior to such meetings.
  • Align OTCQX U.S. Premier tier standards with financial standards of markets recognized by many states for Blue Sky law issuer exemptions – OTC Markets Group has updated the standards of OTCQX U.S. Premier, the highest OTCQX tier for U.S. companies, to align with the financial standards of markets recognized by many U.S. states for issuer exemptions from state Blue Sky laws.  Updated standards include:
    • A bid price requirement of $4 for initial qualification and $1 ongoing;
    • A market capitalization of $10 million for initial qualification and $5 million ongoing for companies with a public float of at least $15 million, or $50 million initially and $35 million ongoing for companies with a public float of at least $1 million and $750,000 in net income as of the most recent fiscal year end (banks will be required to have a public float of 500,000 to qualify for OTCQX U.S. Premier);
    • A 3-year operating history. 

In addition, OTCQX U.S. Premier tier has a stockholders' equity requirement of $4 million for initial qualification and $1 million ongoing, and a requirement of at least four market makers with priced quotes on OTC Link ATS within 90 days of the company joining OTCQX.

  • Align OTCQX International Premier tier standards with recognized margin eligibility standards for global companies – OTC Markets Group has modified the standards of OTCQX International Premier, the highest OTCQX tier for non-U.S. companies, to align with the margin eligibility standards set by the Federal Reserve and the SEC.  These updated standards include:
    • A global market capitalization of $1 billion for initial qualification and $500 million ongoing;
    • A 5-year operating history;
    • Average weekly share volume of 200,000 or dollar volume of $1 million for initial qualification, and 100,000 shares or $500,000 ongoing.

In addition, OTCQX International Premier tier companies will be required to have at least four market makers with priced quotes on OTC Link ATS within 90 days of joining. 

"The introduction of strengthened OTCQX eligibility requirements combined with new common sense, best practice corporate governance standards for U.S. companies and banks further distinguishes OTCQX as a trusted public market that is efficiently linked by technology and transparency," said R. Cromwell Coulson, President and CEO of OTC Markets Group.  "Our goal with these changes is not only to improve the quality of OTCQX, but to enhance regulatory recognition of OTCQX as an investable market and make it easier for investors and our network of broker-dealers to analyze, value and trade these securities."   

In conjunction with the rule changes, OTC Markets Group has raised the annual fee to trade on OTCQX to $20,000, which is less than half the cost of a NASDAQ listing.  Companies that join OTCQX after January 1, 2016, will be required to comply with the new requirements and fee as of that date.  Companies on OTCQX as of December 31, 2015 will have until 2017 to meet the new standards or be transitioned to the OTCQB® Venture Market. 

For a detailed copy of the OTCQX rule changes, visit http://www.otcmarkets.com/content/doc/qx/Rules/Release/10Update.pdf.

About OTC Markets Group Inc.
OTC Markets Group Inc. (OTCQX: OTCM) operates Open, Transparent and Connected financial markets for 10,000 U.S. and global securities.  Through our OTC Link® ATS, we directly link a diverse network of broker-dealers that provide liquidity and execution services for a wide spectrum of securities.  We organize these securities into markets to inform investors of opportunities and risks: the OTCQX® Best Market; the OTCQB® Venture Market; and the OTC Pink® Open Market.  Our data-driven platform enables investors to easily trade through the broker of their choice at the best possible price and empowers a broad range of companies to improve the quality and availability of information for their investors.  To learn more about how we create better informed and more efficient financial markets, visit www.otcmarkets.com.

OTC Link ATS is operated by OTC Link LLC, member FINRA/SIPC and SEC regulated ATS.
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Media Contact:
Saskia Sidenfaden, OTC Markets Group Inc., +1 (212) 896-4428, saskia@otcmarkets.com

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SOURCE OTC Markets Group Inc.



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