Companies on the OTCQX Best Market see clear benefits within a year of joining the exchange, a new study reveals.
“OTCQX: The Clear Advantage,” commissioned by OTC Markets Group and conducted by Oxford Metrica, looked at every company trading on the exchange for at least three months during a three-year period ending on Oct. 31, 2015, including those who merged, were acquired or who graduated to another exchange.
Each company had their liquidity analyzed for the six-month periods both immediately before and after they began trading on OTCQX.
The 397 companies had a $1 trillion combined market capitalization.
Once on the OTCQX, the average company saw its share trading volume increase by 53 percent and its dollar volume by 57 percent. Their average bid-ask spread narrowed by four percent and the average number of broker-dealers per security rose by 16 percent.
“Company executives and boards of directors consider numerous factors when choosing where their company’s shares should trade in the U.S. public markets, not least of which is the liquidity and investor perception of the various trading markets,” said Jason Paltrowitz, Executive Vice President of Corporate Services at OTC Markets Group.
“The study indicated that U.S. institutional investors also have a more positive opinion of OTCQX companies due to the market’s high financial and disclosure standards, the availability of more data for analyzing investment decisions, and the voluntary openness issuers demonstrate by choosing to trade there.”