OTC Markets Group has just published a commissioned study by Oxford Metrica, a strategic advisory firm, pointing to the benefits of listing shares on the OTCQX by international firms. OTC Markets is an ATS and competes heavily with the Nasdaq, NYSE etc. So why would an international firm select OTCQX, their best marketplace, versus another alternative? In the end, it comes down to liquidity, value gained, and cost. According to OTC, there are currently over 400 securities from 27 countries traded on OTCQX – including names like Heineken and Adidas.
In reviewing the portfolio of international issuers that have traded on the OTCQX since 2007, the report comes up with some conclusions:
- US ownership increased 7-fold after joining OTCQX.
- Trading volume by number of shares increased 28% within the home market.
- Trading volume by number of shares increased 37% within the OTC market.
- Trading volume of firms falling into the lower half of the distribution by size increased 43%.
- Trading volume of firms falling into the upper half of the distribution by size increased 12%.
- There were positive liquidity reactions for companies from Canada, Asia Pacific & Europe.
- 1.5% of value was created within the home market.
OTC Markets has always been vocal about the fact it is less expensive to trade on their marketplaces than exchanges – a competitive advantage. And for many investors looking to purchase shares in a company – you are just looking for the symbol in your brokerage account. So should international firms choose OTCQX vs. alternatives? Well, for a fair number of established, global firms, they have already made the decision to go with OTCQX. It is all about the value proposition.
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