Delistings Drive New Business To Pink OTC Listing Platform
20 Agosto 2009 - 5:09PM
Dow Jones News
A surge in delistings on major U.S. stock exchanges is fueling
new business for a small market positioned between the
over-the-counter Pink Sheets and major listings venues.
The OTCQX platform is pitched as the upper tier of the Pink
Sheets, and has also attracted overseas companies that see
cross-listing on a U.S. exchange as too expensive, according to R.
Cromwell Coulson, chief executive of Pink OTC Markets Inc.
The platform targets retail investors, hedge funds and
investment advisers, and listings have climbed to 66 from 36 at the
end of last year with the addition this week of Datatrak
International Inc., a $4.5 million technology services company.
While some OTCQX-listed companies delisted by choice from NYSE
Euronext (NYX) or Nasdaq OMX Group Inc. (NDAQ), others saw their
exchange listings revokedafter falling below minimum size
thresholds.
"If you look at [those] exchanges as being Yale and Harvard,
they're great schools, but not everybody goes there," Coulson said.
"Either you can't get in, or can't afford it, but there are lots of
other fine schools."
OTCQX is operated by Pink OTC Markets, which also runs the Pink
Sheets, and provides online quoting and an electronic trading
platform for brokers that deal in these securities. The latter
market is home to around 5,000 companies, some fallen on hard times
and others with questionable histories.
Launched in 2007, the OTCQX serves to highlight the cream of the
Pinks - reputable companies that want to maintain visibility in the
U.S. market without the responsibility of full Sarbanes-Oxley Act
compliance or the price tag that comes with a Nasdaq OMX or NYSE
listing.
The privately held company makes most of its revenue from
trading fees for broker-dealers and market data, according to
Coulson, the biggest shareholder.
Some companies on OTCQX upgraded from the Pink Sheets, or are
non-U.S. concerns that view the platform as their path to an
exchange listing. In May, Brazilian beef producer JBS S.A. signed
on with an eye toward a spot on the New York Stock Exchange,
according to Coulson.
OTCQX-listed U.S. companies are required to either provide
disclosure through the Securities and Exchange Commission or comply
with the platform's Alternative Reporting Standard, similar to SEC
standards minus the Sarbanes-Oxley 404 audit.
International companies cross-listing on the platform must be
exempt from SEC rule 12g3-2(b), posting the financial disclosures
required by their home country's exchange.
Delistings on U.S. exchanges have jumped with the financial
crisis. Through mid-July, 72 companies had been kicked off Nasdaq
OMX markets for falling below minimum bid price and market cap
requirements, with NYSE Euronext shedding 24 names.
Last year, Nasdaq OMX saw 85 companies delisted, and NYSE
Euronext nearly 50 - its highest level in five years.
In an economy still grappling with a deep recession, Coulson
expects to see more companies exit their U.S. exchange listings,
bringing more potential listings for OTCQX.
But despite the tough environment, exchanges don't see the OTCQX
cutting into potential business.
"This platform serves a purpose for a particular type of company
in a particular type of market, but it's not a competitive threat,"
said a spokesman for NYSE Euronext.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117;
jacob.bunge@dowjones.com