Photo credit: OTC Markets Group (PRNewsfoto/OTC Markets Group Inc.)
OTC Markets Group Inc. (OTCQX: OTCM), an operator of financial markets, has reached the halfway mark of 25 states that now recognize its premium OTCQX market for the purposes of their “Blue Sky Manual Exemption” for secondary trading.
Blue Sky rules can stymie trading in securities as the issuer must seek approval by the relevant state authorities prior to any transactions taking place. By receiving a blanket approval, securities listed on OTCQX and OTCQB do not need to seek individual state approval thus dramatically streamlining the process. Since the recognition by the SEC that OTCQX and OTCQB are established public markets, OTC Markets Group has fostered an ongoing dialogue with state regulators to apprise them of the easily accessible, free, public online disclosure of current information offered by companies traded on the OTCQX and OTCQB markets.
Effective July 1, 2016, Vermont became the first state to recognize the OTCQX market. One year later, half of the 50 states are now acknowledging the OTCQX Market for the purposes of Blue Sky Manual exemption.
OTC Markets reports that Utah marks the latest addition to the growing list of states that recognize the OTCQX and OTCQB markets, following the recent additions of Delaware, West Virginia, Indiana and Maine. Each of the 25 states has tailored its approach to granting Blue Sky exemption, using no-action letters, rule changes and administrative orders.
“We thank each of the respective state regulators whose efforts further underscore the quality of disclosure standards on our OTCQX and OTCQB premium trading markets,” said R. Cromwell Coulson, President and CEO of OTC Markets Group. “OTC Markets will continue to champion this regulatory recognition, which improves investor information availability, lowers regulatory complexity for public companies and ultimately improves capital formation. We look forward to building upon this momentum to proactively educate all remaining states in order to achieve our goal of nationwide Blue Sky recognition for public companies traded on the OTCQX best market.”
The breakdown of the list of 25 states that recognize the Blue Sky Manual Exemption is as follows:
22 states recognize both the OTCQX and OTCQB markets:
Alaska, Arkansas, Colorado, Delaware, Georgia, Indiana, Iowa, Maine, Mississippi, Nebraska, New Jersey, New Mexico, Ohio, Oregon, Rhode Island, South Dakota, Texas, Utah, Washington, West Virginia, Wisconsin and Wyoming.
3 states solely recognize the OTCQX Market: Idaho, Kansas, and Vermont.
OTC Markets explains that State Blue Sky laws generally help investors make informed decisions by mandating that companies disclose accurate and current information when offering or marketing securities. Regulators and brokers across the country rely on disclosure-based manual exemptions from individual state Blue Sky laws. Forty-four U.S. states and jurisdictions maintain manual exemptions, which generally allow for secondary trading of qualifying companies as long as certain key information about the company is published in a nationally recognized securities manual or its electronic equivalent. Each state determines which manuals qualify under its rules.