Most Innovative Market Data Project (Vendor): OTC Markets

IRD/IMD Awards 2017

IMD/IRM Awards 2017 Most Innovative Market Data Project Vendor
Max Bowie and Chris Grant, vice-president, market data, OTC Markets

In a regulatory landscape that is increasingly complex to navigate, there are an ever-growing number of pitfalls and risks that firms must strive to avoid. Over-the-counter (OTC) equities is one of the areas that has entered the spotlight—as largely manual processes such as analyzing and assessing risk on the security level can result in onerous compliance processes, potential risk exposure and missed opportunities for investors. With a compelling solution to help firms automate this process, OTC Markets Group has come out on top of the Most Innovative Market Data Project (Vendor) category this year for its new OTC Compliance Analytics product.

Launched on the back of OTC Markets’ success with its OTC Compliance Data File, the new quantitative tool expands on the original product, providing more data points and an aggregated risk score for OTC equity securities. The addition was designed to help broker-dealers and investment managers automate risk processes and identify opportunities for Pink, Grey, 20,000 OTCQX and OTCQB Markets securities. “We’re trying to provide more transparency in the marketplace to ensure people can evaluate both opportunity and risk and take out manual processes from a compliance standpoint,” says Matthew Fuchs, executive vice president of market data and strategy at OTC Markets Group.

The product comprises an enhanced compliance data file with more than 80 current and historic OTC compliance data points. An issuer analytics file also provides an overall risk value derived by an algorithm that assigns a value to 16 risk variables, such as Penny Stock and Caveat Emptor status. “A lot of the customers [of the OTC Compliance Data File] were asking for this type of scoring to help alleviate the manual work they had,” says Fuchs, who explains that the file gives users the ability to either use the risk score in the issuer analytics file or look at the underlying value of the risk parameters in the Compliance Data File to assign their own risk value.  

Despite launching the product only a few months ago, several firms are already live with OTC Compliance Analytics and use the premium version of the product to automate their OTC risk and compliance processes. While OTC Markets continues signing up new subscribers, there are already plans to add other datasets that users can follow from a risk perspective. OTC Markets will add data from sets to which they have gained access with their recently announced acquisition of theOTC.tod ay, a website that monitors and analyzes stock promotion campaigns.

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