electronic venture markets, a presentation at heritage foundation, 5/4/15
TRANSCRIPT
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OTC MARKETS GROUPOpen /// Transparent /// Connected
Electronic Venture Markets
May 2015
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Our Mission: To create better informed and more efficient financial marketplaces
OTC Markets Group Inc. (OTCQX:OTCM)
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Global Leader in Exchange Graduations
Market 2014 Graduates to Main BoardsOTCQX, OTCQB and OTC Pink - US 83TSX Venture - Canada 22LSE AIM Market - UK 5
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Small Companies Need Liquidity
Cumulative Average Order Book by Market Capitalization
Source: SEC.gov
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Individuals Own Small Companies
Percentage Ownership of Exchange-Listed CompaniesMarket Cap (millions)
Median Institutional Ownership
Median Individual Ownership
$0-50 10.9% 89.1%$51-100 19.9% 80.1%$101-250 31.3% 68.7%$251-500 43.7% 56.3%$501-1000 62.4% 37.6%$1001+ 83.5% 16.5%
Source: SEC.gov
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Individuals Are Well Served By Online Brokers
Source: Barron’s
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Retail Investor Orders ♥
Market Maker Trade Quality
“Like malls losing shoppers to nearby Costcos, exchanges lost out to market makers in the competition for retail market orders.” Barron’s
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Alternatives Expand Opportunities
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Enable Electronic Interstate Commerce
http://www.sec.gov/news/testimony/testimony-venture-exchanges.html#_ftn2
Electronic Venture Markets need national standards for:• Reg A+ Tier 2 Offerings Blue Sky Preemption• All fully SEC registered offerings • Secondary transactions in SEC reporting companies• Secondary transactions through broker-dealers • Registration of electronic broker-dealers
Unify markets with uniform securities regulations
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Unleash Venture Companies
• Finish JOBS Act Crowdfunding Rules• Establish a path for companies to provide current
information electronically• Modernize the “Penny Stock” Definition • Improve Internet Promoter Disclosure• Remove complexity and cost
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Broker-Dealer Ecosystem
http://www.sec.gov/news/testimony/testimony-venture-exchanges.html#_ftn2
• Support Small Brokers and Market Makers• Improve Point of Sale Disclosure • Update Reg SHO • Streamline the On-ramp for OTC Trading • Expand Margin Eligibility• Enable Technology and Transparency
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Steps to Investor Liquidity & Growth
Broker-Dealers
Alternative Trading Systems
Exchanges