OTC Markets (OTCM) will be removing about 250 companies from its OTCQB Marketplace for failing to trade with a share price of at least $0.01 for the last 30 days. The companies being removed from the OTCQB Marketplace will be downgraded to OTC Pink, OTC’s “open” marketplace.
The move is a part of new eligibility standards for OTCQB Marketplace, OTC Markets’ venture-stage marketplace, that are getting rolled out this year. After notifying OTCQB companies on March 26, the new standards will go active as of Thursday, May 1, 2014. These new standards require that a company have a minimum bid price of $0.01 a share, require confirmation that company information is current in an annual OTCQB certification, and International Reporting companies will now be able to upgrade from OTC Pink to OTCQB.
A list of the 250 companies being downgraded to OTC Pink for failing to reach a $0.01 share price for 30-straight days will be provided by OTC Markets after the closing bell.
“We are confident that the improved OTCQB marketplace will be a much better option for engaged and investor-focused venture stage companies,” said the company in a March 26 statement. “The added transparency and minimum standards will be a welcomed improvement for investors, broker-dealers, company advisers, regulators, company executives, and shareholders.
OTC Markets currently divides its markets into three tiers. OTCQX has stricter reporting standards and includes ADRs from large foreign companies including Roche (RHHBY) and Volkswagen ($VLKAY), OTCQB is a venture-stage marketplace for SEC- and Bank-reporting companies, and OTC Pink is an open marketplace that allows for the electronic trading of any type of security not covered by OTCQX and OTCQB.
The standards should simultaneously open up OTCQB, which replaces the OTC Bulletin Board (OTCBB), to a new group of international companies that previously didn’t qualify while also removing some of securities that may have been of more dubious value to their shareholders. The move comes in response to a desire expressed by some investors an executives to improve OTCQB Marketplace to improve its quality as a venture-stage marketplace.
OTCQB Marketplace now has over 3,000 securities trading on it with an average of 10 market makers per security.
UPDATE – 5/1/14: OTC Markets has released a list of the 239 companies that will be downgraded to OTC Pink.
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