OTC Markets

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The "Slow PO"

Public trading is often a key component in creating successful and sustainable enterprises over the long-term, and provides companies with access to benefits not easily available to private companies.

Companies go public to build visibility, create share liquidity, grow their valuation, gain wider access to capital and convey their reputation to investors. Public companies have the advantage of perpetual capital, competitive benchmarks and trust that is driven by transparency.

In contrast to the traditional accelerated IPO process, a “Slow PO” enables companies to enter into the public markets by making previously restricted shares available for public trading by brokers on the OTCQX®, OTCQB® and Pink® markets. The Slow PO is akin to a “direct listing on an exchange where a company goes public without raising money and without underwriting as in a traditional IPOThe longer on-ramp allows seasoned companies with an established investor base to avoid the high costs and time pressures of a traditional IPO, while growing their liquidity organically over time. The Slow PO also provides management more resources to focus on executing their business plans as they grow into the company they aspire to be.

Shareholder capital raised through private placements to angel investors, private equity firms, and venture capital has created a huge pool of value that can be unlocked and used by companies to build an informed and efficient public trading market of these freely tradable shares.
 

Benefits of a Slow PO

  • Provides management with more resources to focus on growing the business rather than meeting externally-imposed financial targets and time pressures of a traditional IPO
  • Builds investor confidence in the quality of the company’s management and financials as the market in its shares expand
  • Enables companies to grow liquidity organically through a slower entry to the public markets
  • Allows companies to choose the market visibility and reporting status that best fits their needs whether SEC-reporting or Alternative Reporting Standard
     

How a Slow PO Works

A Slow PO enables companies to enter the public markets by making previously restricted shares available for public trading on the OTCQX, OTCQB and Pink markets.

  1. RAISE CAPITAL IN PRIVATE OR RESTRICTED OFFERINGS: The Securities Act of 1933 provides several exemptions from registration for companies looking to sell shares to investors. Three of the more popular offering exemptions are:
    • Rule 506 of Regulation D
    • Rule 144A
    • Rule 701

  2. MAKING SHARES TRADABLE AFTER REGISTRATION OR SEASONING: Once shares have been created, a company can make those shares immediately tradable by registering them with the SEC via a Form 10 filing or by removing restrictive legends of seasoned non-affiliate shares that have been held for greater than one year under Securities Act Rule 144, which provides an exemption from registration for the resale of restricted securities into the public market.

  3. ENABLE BROKER-DEALERS TO QUOTE SHARES ON OTC LINK® ATS: A FINRA-member broker-dealer must sponsor the company’s securities by filing a Form 211 with FINRA. After 30 days, those securities will become “piggyback qualified,” allowing any broker-dealer to quote them. For a list of broker-dealers willing to sponsor new securities, click here
     

Selecting a Market: OTCQX, OTCQB and Pink

OTC Markets Group operates the OTCQX®, OTCQB® and  Pink® financial markets for 10,000 U.S. and global securities. These securities are traded on our regulated Alternative Trading System, OTC Link® ATS, by a network of 110 of the largest broker-dealers that also trade NYSE and NASDAQ securities.

Securities that brokers chose to trade without the involvement of the company are by default traded on Pink, an open market for broker-dealers to trade all types of securities. In order to provide a better information and trading experience for investors, companies can choose to apply to the OTCQX Best Market for established, growth and global companies or the OTCQB Venture Market for entrepreneurial and development stage companies.

The OTCQX Best Market

The OTCQX Best Market is designed for established, growth and global companies that meet high financial and operating standards, and are committed to building visibility with the investment community. Companies on OTCQX are distinguished by the diligence with which they provide information, demonstrate compliance with U.S. securities laws, and clearly convey their qualifications to investors.

The OTCQB Venture Market

The OTCQB Venture Market is designed for entrepreneurial and development stage companies that are current in their reporting. To improve transparency on OTCQB, companies are required to undergo a new annual verification and management certification process. Companies must meet a minimum bid price test of $0.01 and may not be in bankruptcy.

The Pink Open Market

The Pink Open Market is designed for broker-dealers to electronically trade all types of securities without requiring company involvement. With no minimum financial standards, Pink includes penny stocks, and shells, as well as distressed, delinquent, and dark companies, and foreign companies that limit distribution of their disclosure to their home market.  Pink requires sophisticated investors to dig deeper and be extra thorough in their research before making any trading decisions.


Liquidity on OTCQX, OTCQB and Pink

OTC Link® ATS is an SEC-registered Alternative Trading System for broker-dealer subscribers to provide investors with an efficient and effective electronic trading experience. OTC Link® ATS directly links a diverse network of more than 100 leading U.S. broker-dealers that provide liquidity and execution services for 10,000 U.S. and global OTCQX, OTCQB and Pink securities. Its real-time price transparency and connectivity offers broker-dealers control of trades and choice of counterparties so that they can efficiently provide best execution, attract order flow, and comply with FINRA and SEC regulations.

In 2016, $193 billion in dollar volume was traded in OTCQX, OTCQB and Pink securities.

In addition, investors in all OTCQX and OTCQB companies may view the full market-depth of their stock free of charge on www.otcmarkets.com through the Real-Time Level 2 Quote Display Service. OTC Link® ATS is operated by OTC Link LLC, a FINRA member broker-dealer and wholly owned subsidiary of OTC Markets Group Inc.

OTC Link® ATS is operated by OTC Link LLC, a FINRA member broker-dealer and wholly owned subsidiary of OTC Markets Group Inc.

 

Contact us to learn more:

Email: issuers@otcmarkets.com
Phone: +1.212.896.4420
Website: www.otcmarkets.com