New Regulatory Developments Impacting Our Marketplaces

SEC Considers OTCQX® and OTCQB® Marketplaces “Established Public Markets” for Purposes of Equity Line Financing Registrations

On May 16, the SEC updated its Compliance and Disclosure Interpretations stating that the OTCQX and OTCQB marketplaces are now considered “established public markets” for the purposes of establishing a public market price when registering securities for resale in equity line financings on SEC Forms S-1 or S-3. As a result, companies may use their OTCQX or OTCQB marketplace trading to complete an equity line financing registration statement, and no longer need to have a quote on FINRA's OTC Bulletin Board to be considered having an established public market.

The SEC’s decision comes after a decade of changes and improvements in technology, transparency and regulation in the OTCQX and OTCQB marketplaces, and marks an important development for SEC reporting companies. These companies may now rely on the depth and breadth of broker-dealers quoting and trading on the OTCQX and OTCQB marketplaces to establish a public market price when raising capital.

To view the SEC’s May 16 Compliance and Disclosure Interpretation Question 139.13 updating its “established public market” policy, click here.

Companies with questions regarding this SEC policy change should contact our Issuer Services division at (212) 896-4420 or Broker-dealer subscribers with questions should contact OTC Link Trading Services at (212) 896-4420 or

OTC Markets Group Lobbies SEC to Expand Form 13(f) Reporting Requirements to Include OTC Equity Securities

OTC Markets Group has submitted a comment letter to the SEC requesting that the Commission expand the scope of Form 13(f) reporting requirements to include all equity securities traded on the OTCQX, OTCQB and OTC Pink marketplaces.

Under Section 13(f) of the Securities Exchange Act, institutional investment managers with over $100 million under management are required to file a quarterly report of their equity holdings in all exchange-listed securities, but there is no such reporting requirement for securities trading off a national securities exchange. As a result, there are over 9,400 companies that are unable to accurately determine which institutions hold their securities, with no available recourse. That includes over 2,500 foreign companies whose ADRs and foreign ordinary shares trade exclusively on the OTCQX, OTCQB and OTC Pink marketplaces, approximately 700 community banks, 3,800 SEC reporting companies and thousands of smaller U.S. companies.

As we stated in our SEC comment letter, “When Congress mandated quarterly reporting under Section 13(f), it noted its intent to ‘create... a central repository of historical and current data about the investment activities of institutional investment managers, in order to improve the body of factual data available and to facilitate consideration of the influence and impact of institutional investment managers on the securities markets and public policy implications of that influence.’ Including securities traded on the OTCQX, OTCQB and OTC Pink marketplaces in 13(f) reporting would shed light on the activities of institutional investment managers working with these securities and support the Congressional intent behind the rule.”

To read our April 30 SEC comment letter, click here. Please read the recent Barron’s article covering our comment letter on 13(f).