EQS-News

The OTCQX And OTCQB Markets Experience A Shift Over Pink Tiers Following Improved Regulation Standards By The SEC

EQS-News: OTC Markets The OTCQX And OTCQB Markets Experience A Shift Over Pink Tiers Following Improved Regulation Standards By The SEC 06.10.2022 / 14:00 CET/CEST The issuer is solely responsible for the content of this announcement. On September 28, 2021, an amendment to the U.S. Securities and Exchange Commission (SEC) Rule 15c2-11 came into force with significant implications for retail investors trading the more than 12,000 securities in the OTC Markets.

Previously, the rule required market makers to only review basic issuer information before publishing quotations for that issuer's securities. The SEC writes, “Market makers must have a reasonable basis for believing that the information is accurate and from reliable sources. The Rule describes the kind of

information that the broker-dealer must review.”

Outlining previous issues with Rule15c2-11, the SEC writes: “The problem … is that once one market

maker has published quotations for a security for at least 30 days, other market makers can publish quotations for the security without reviewing any information (i.e., they can ‘piggyback’ onto the quotes of the first market maker). Market makers then can quote indefinitely without reviewing any updated information (unless the commission suspends trading in the security).”

In a recent study by Oxford Metrica on OTC Markets Group Inc. (OTCQX: OTCM), figures showed that since the revision of Rule 15c2-11 came into effect, there has been greater investor interest, visibility and liquidity in the OTC Markets. The report shows that clear improvements occurred as securities moved “up” the chain of markets. OTC Markets provides a natural infrastructure for companies to aspire to trade on the highest market for which they qualify, creating an environment based on merit, transparency and accurate information.

Key Findings In The OTC Markets Group Report

Based on a 140-day trading period after the enactment date of SEC Rule 15c2-11, OTC Markets Group outlined the following findings:

1. 16.7% gain in value for OTCQX and OTCQB issuers compared to a 1% gain for Pink issuers

2. 21% gain in value for upgrades from Pink to OTCQX and OTCQB tiers compared to a 2.7% loss for downgrading from Pink Current to Pink Limited