OTC Markets

As uncertainty continues around the economic ripple effects of Brexit, the war in Ukraine and the Chinese real estate crisis, gaining access to the deep pockets of the US capital markets has become even more crucial for foreign issuers around the world.

However, foreign issuers on exchanges like NYSE or Nasdaq are subject to onerous US exchange listing requirements and different accounting standards, which can prove resource-intensive, time-consuming and cost-prohibitive for all but the largest companies.

The OTC Markets, which allow securities to be traded via a broker-dealer network rather than on a centralised exchange, can allow UK and European companies to bypass these complexities while still acquiring the crucial US ticker symbol that can be bought in US dollars during US market hours.

1. OTCQX: the premium tier, also called the ‘Best Market’
2. OTCQB: the middle tier, also called the ‘Venture Market’
3. OTC Pink: the lowest and most speculative tier, also called the ‘Pink Open Market’

In 2022, First Sentinel became the first OTCQX and OTCQB approved sponsor in the UK. This means we can help our listed clients cross-trade in the US by assessing their suitability and then submitting a Letter of Introduction to these markets on their behalf. We are proud to be listed in OTCQX’s Premium Provider Directory.

For foreign issuers, the process of joining the OTCQX Market is designed to be as light-touch as possible. After all, the regulatory aspect has already been satisfied in the home market. The first step is to appoint a corporate sponsor to assess and write a letter of introduction, which in turn allows for a ticker symbol to be created by FINRA. First Sentinel is an approved sponsor for these purposes.

OTCQX is suitable for companies that:

• Demonstrate Rule 12g3-2(b) compliance by being listed on a qualified foreign exchange (AQSE, AIM and the LSE are included in this category) and publishing electronically in English specified non-US disclosure documents OR are an SEC Reporting Company
• Meet OTCQX international financial standards, including a $10 million minimum market cap and $0.25 minimum bid price
• Have a freely traded public float of at least 10%
• Have the fully audited financials required to meet the penny stock exemption
• Are not a shell company
• Can submit a Letter of Introduction from an OTCQX Sponsor (First Sentinel Corporate Finance)

OTCQB is suitable for companies that:

• Demonstrate Rule 12g3-2(b) compliance by being listed on a qualified foreign exchange (AQSE, AIM and the LSE are included in this category) and publishing electronically in English specified non-US disclosure documents OR are an SEC Reporting Company
• Have audited annual financials
• Meet the minimum $0.01 bid price and are not in bankruptcy
• Have at least 50 beneficial shareholders, each owning at least 100 shares
• Have a freely traded public float of at least 10% of the total issued and outstanding of that security. Companies with a freely traded public float of at least  5% (and $2 million in market value of public float), or a separate class of securities traded on a national exchange, may apply for an exemption.
• Submit a Letter of Introduction from an OTCQB approved sponsor (First Sentinel Corporate Finance)