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Companies Experienced 53% Increase in Share Volume after Joining OTCQX Market, According to New Study
Independent study finds U.S. and international companies enjoyed greater liquidity, narrower spreads and more market-makers six months after joining top market
PR Newswire, NEW YORK – January 28, 2016
Companies experience a 53% increase in trading volume on average six months after joining the OTCQX® Best Market compared to the six months prior to joining, according to a new study released today by OTC Markets Group Inc. (OTCQX: OTCM). Similarly, company dollar volumes increased by 57% on average after joining OTCQX compared to the previous six months.
The independent study, “OTCQX: The Clear Advantage,” was conducted by strategic advisory firm Oxford Metrica for OTC Markets Group to evaluate the impact of moving to OTCQX, the top market of the U.S. over-the-counter (“OTC”) market, in terms of share liquidity, bid-ask spreads, broker-dealer coverage and investor perception. The study evaluated all securities that traded on OTCQX for at least three months during the three years through October 31, 2015, a total of 397 primary securities with $1 trillion in combined market capitalization. Liquidity was analyzed for the six months prior to starting trading on OTCQX compared with the subsequent six months.
“Company executives and boards of directors consider numerous factors when choosing where their company’s shares should trade in the U.S. public markets, not least of which is the liquidity and investor perception of the various trading markets,” said Jason Paltrowitz, Executive Vice President of Corporate Services at OTC Markets Group. “The fact that companies that chose to trade on our top OTCQX market experienced a 53% increase in trading volume, narrower bid-ask spreads and a 16% average increase in the number of broker-dealers quoting their security speaks to the significant advantage that OTCQX can provide for qualifying U.S. and international issuers. The study indicated that U.S. institutional investors also have a more positive opinion of OTCQX companies due to the market’s high financial and disclosure standards, the availability of more data for analyzing investment decisions, and the voluntary openness issuers demonstrate by choosing to trade there.”
- Trading volume by number of shares increased by 53% on average following a move to the OTCQX market
- Dollar volumes increased similarly by 57% on average
- Bid-ask spreads narrowed by 4% on average
- The number of broker-dealers per security rose on average by 16%.
About the Study
The study was commissioned by OTC Markets Group and conducted by Oxford Metrica. All securities that traded on OTCQX for at least three months during the three year study period were included in the study, including those currently active on OTCQX, plus those that traded on OTCQX and subsequently graduated to a national stock exchange or left due to merger or acquisition. No sampling was undertaken and all securities that fit the aforementioned criteria were included.
The investor survey was conducted by Oxford Metrica in telephone interviews during October 2015.
A copy of the full study is available online and for download at http://www.otcmarkets.com/content/doc/OTCQXTheClearAdvantage.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 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.
Saskia Sidenfaden, OTC Markets Group Inc., +1 (212) 896-4428, firstname.lastname@example.org