OTC Markets lists over-the-counter equities at three tiers, depending on their size, share price, and the amount of financial reporting and disclosure they do. The majority of OTC trades take place on the OTC Markets Group, a publicly traded company. There's also the Grey Market, which we'll cover below. As an investor, you'll have access to this market depending on your broker. One primary over-the-counter (OTC) network is OTC Markets Group. ![]() Cryptocurrencies, like bitcoin and ethereum.More than $6.6 trillion worth in different nations' money trades every day on what's called the Forex, an over-the-counter currency exchange. American Depositary Receipts (ADRs), sometimes called ADSs, or bank certificates that represent a specified number of shares of a foreign stock.These can be options, forwards, futures, or other agreements whose value is based on that of an underlying asset, like a stock. ![]() Derivatives, private contracts between two parties, typically arranged by a broker.OTC markets are a better fit for bonds than stock exchanges because of the large size of trades, number of bonds traded, and the infrequent trading of bonds.īesides stocks and bonds, investments that trade OTC often include: Most bonds trade OTC after their initial offering. NASDAQ, for example, charges companies up to $167,000 to be listed, assuming they qualify.įast fact: More than 10,000 securities trade OTC. Other OTC companies are larger, but can't afford (or don't want to pay) the listing fees the major exchanges charge. Often referred to as penny stocks, they trade for less than $5 per share. ![]() Many OTC securities include stocks issued by small companies that don't qualify to be listed on major exchanges because they don't trade enough shares or their shares don't sell above a minimum price. Broker-dealers are regulated by the Financial Industry Regulatory Authority (FINRA). In fact, SEC regulations were updated in September 2020 to enhance disclosure and investor protections by ensuring that broker-dealers do not publish price quotes for a security when current information about that security is not publicly available.Īlso, OTC trading is usually done through a licensed broker-dealer. Many OTC stocks are subject to at least some oversight by the SEC. That said, there are still federal regulatory hoops to jump through.
0 Comments
Leave a Reply. |