Best Real-Time Market Data Initiative: OTC Markets Group

As trading in these securities is subject to an array of rules, including the Securities and Exchange Commission’s (SEC) Penny Stock Rules, in order to protect investors, broker-dealers need to conduct additional due diligence and undertake an onerous compliance process before making a transaction. Without the tools to even identify what securities are exempt from the rules—not to mention the ability to effectively analyze the securities—trading in OTCQX, OTCQB and Pink securities is often associated with unnecessary risk and time-consuming compliance procedures.

To solve the problem and enable broker-dealers to expand the breadth of securities they can recommend, OTC Markets Group launched OTC Compliance Data File, a file that is a first of its kind and delivered twice daily in pipe-delimited format, making it timely and easy to consume. The datapoints in the file include OTCQX, OTCQB and Pink marketplace designation; SEC Penny Stock status and applicable exemptions to the definition of a “penny stock”; and Caveat Emptor status, the status under OTC Markets Group’s “Caveat Emptor” policy, which labels securities that pose a public-interest concern.

Not surprisingly, judges of this year’s Inside Market Data Awards praised the initiative for fixing a compliance issue at a time when compliance is an ever-growing concern in the industry and “any support for the regulatory environment is welcome”. Judges called the initiative “compelling” and concluded that “AML compliance officers must love this”.