OTC Markets Group: Putting their Knowledge to Work
Andy Kyzyk, Senior Vice President of Advisor Relations at OTC Markets Group has spent most of his career in capital markets, from running the NYSE London office to working for Goldman Sachs as a Vice President in New York City. What attracted him to OTC, he says, was “they were solving problems for non-US issuers. Everyone was trying to figure out how to broaden their shareholder base and increase valuations as well as trading.”
OTC Markets Group approached the problem with, what Andy calls, “simplicity.” The company pulled off what their larger peers couldn’t or didn’t want to do: make it easy and more efficient for foreign issuers who are already listed on an approved market exchange with strict corporate governance and continuous financial reporting standards.
“Issuers want tradability to reach the US markets. The U.S. equity markets are among the deepest, most liquid and most efficient in the world, with investors enjoying high volumes, low transaction costs and fast execution speeds,” adds Andy. “Who wouldn’t want to benefit from the trillions of dollars in our markets flowing from high-net-worth individuals, qualified institutional buyers, hedge funds, family offices,large- and medium-sized institutions or retail?”
The secondary markets, like the national exchanges and the over-the-counter (OTC) markets are critical in steering the price of a security to its actual value based on the laws of supply and demand. Abroad, once a company raises money through its public offering, “the secondary markets are seldom seen as robust as the US,” says Andy. According to JPMorgan Chase & Co., day traders alone accounted for 23% of the US market’s total volume in late January, above the previous high of 22% reached during the 2021 meme stock mania.
Andy continues, “The US is a retail market. Whether individuals are investing in mutual funds or ETFs, as a country it’s in our genetics. You don’t have that in foreign markets which makes the US quite attractive, especially to a foreign company doing business here. When we launched the Corporate Services group, not only did we help broker-dealers trade with more transparent pricing in the over-the-counter market but we also wanted third-party verifications and a set of standards for advisors, lawyers and bankers, among others. The biggest shift was Rule 15c2-11, an important component of [the OTC] market regulatory structure. The SEC gave us a ‘superpower’ as Cromwell [R. Cromwell Coulson, President and CEO of OTC Markets Group, Inc.] likes to call it. We can determine if a company has proper corporate disclosure to enable a broker to trade their stock. That’s a very big deal. This gatekeeping process, helps to create a more efficient and functional stock market.”
A decade or so ago, listing in the US, the largest stock market in the world, was a costly and complex endeavor for non-US issuers. Not so much anymore, if you consider the benefits and much lower costs of trading on the OTC markets. With name brand megacaps by the likes of Dannon, Roche, Deutsche Telekom, Heineken, Imperial Brands, Marks & Spencer and BNP Paribas, OTC Markets Group has been actively growing its roster.
OTC Markets Group offers a wide range of support and services, from virtual investor conferences to compliance data to disclosure and news services. The company operates three markets : the OTCQX® Best Market, the OTCQB® Venture Market, and the Pink® Open Market, each with different requirements. Their OTCQX market has the most stringent standards. If a company meets the eligibility and disclosure requirements, it can move between the three markets. For more information about OTC Market’s Group: www.otcmarkets.com.
