Thursday, March 21, 2013

OTC Markets 2012 Stats

For the last couple of years, we've reported some of the trading statistics released by the OTC Markets. A couple weeks ago, they released a summary of their activity in 2012.

The OTC (over-the-counter) Marketplace is divided up into tiers based on the transparency, size and performance of the company.  There are three tiers of companies which provide current information about their securities:

·         OTCQX (the highest tier for companies that meet certain financial standards, provide regular reports, audited financial statements and have the greatest transparency)

·         OTCQB (for companies that are reporting to the SEC or other US regulator and current in those reports)

·         OTC Pink Current Information (for companies that provide regular reports and are current in those filings; our company is on this tier [Symbol: EIPC])

There are two lower tiers for companies that either are not current in their reporting obligations or choose to provide limited or no information. 

·         OTC Pink Limited Information (which, according to the OTC Markets website, is reserved “for companies with financial reporting problems, economic distress, or in bankruptcy to make the limited information they have publicly available.”  It should also be noted that there may be companies on this tier that are not having financial trouble, but rather simply choose not to provide information in accordance with OTC Market guidelines)

·         OTC Pink No Information (consists of companies not willing or able to make any disclosures)

There are two other tiers in the OTC Markets, (“Grey Markets” and “Caveat Emptor”), but statistics on these are not mentioned in the report. 

I found a couple of interesting things in their statistics.  The first thing that jumped out at me was the fact that, although nearly 37% of OTC securities are either on the "limited information” or “no information” tiers, these securities account for only 5% of the total trading volume.

And, although the Pink Current Information tier represents only a quarter of the securities listed, they account for over half the total volume.

It is also worth noting that the OTC Markets as a whole seems to be moving in the right direction.  Here is a summary of where the tiers seem to be headed.

OTCQX tier:  Since 2009, this group has more than tripled in size:
2009: 78 companies
2010: 159
2011: 246
Dec 2012: 400

OTCQB tier: This group (with the 2009 numbers combined between the OTCBB on Pink Quote and the OTCBB only) has seen small decreases, year-to-year, since 2010:
2009: 3,390
2010: 3,851
2011: 3,716
Dec 2012: 3,401

The decreases could be due to a number of reasons – for example, companies could have voluntarily decided to move to the pink sheets (to save money) or they could have been forced to do so due to failures in their reporting obligations, or they may have been promoted to a higher exchange, either within the OTC Markets, or to NASDAQ or one of the other exchanges.

OTC Pink Current Information: This group has risen steadily since 2009:
2009: 1,695
2010: 1,830
2011: 2,043
Dec 2012: 2,499

OTC Pink Limited Information: This group has seen decreases in two consecutive years:
2009: 739
2010: 749
2011: 723
Dec 2012: 609

OTC Pink No Information: This group saw a sharp rise between 2009 and 2010, but has decreased over the last couple years:
2009: 2,445
2010: 3,375
2011: 3,355
Dec 2012: 3,065

For more information, including some trading volume data, check out the OTC Markets press release, issued on 6 March 2013:

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