Beyond the world of publicly traded stocks on the NYSE and Nasdaq, there is the OTC Markets Group. Formerly known as the Pink Sheets, OTC Markets operates three marketplaces composed of about 10,000 US and global securities. Among them include larger global companies which have issued tradable shares in the form of ADRs for the US markets such as Roche and Volkswagen. However, the vast majority are small firms which use the OTC Markets marketplaces as a platform to create a secondary market for their equity sales.
According to the firm, $238 billion in shares were traded among its three marketplaces in 2014. Looking ahead to the future, one area of potential growth is the listing of shares of private companies from equity crowdfunding sales. Specifically, due to the JOBS Act rules going into effect, it has allowed for certain equity sales to fewer restrictions on the size of their ownership group. This in turn makes it easier for shares to trade on public marketplaces.
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As the marketplace widens its reach of available securities, it has also led to increased investor demand of market data of pricing and trades on the OTC Markets. Following on this demand, OTC Markets Group has announced that the latest data vendor to begin distributing its real-time pricing is Xignite. Previously, OTC Markets data on Xignite was limited to a delayed feed.
Speaking to Finance Magnates, an OTC Markets representative explained that the addition of new vendors integrating its real-time feeds is typically driven by demand from the vendor’s clients for the data. Specifically, it was noted that investor demand has been found from asset managers and family office financial advisors as they monitor portfolios, including shares of companies trading on OTC Markets.
In regards to client demand at Xignite, Stephane Dubois, CEO and Founder of Xignite stated: “The securities traded on OTC Markets are becoming increasingly critical to our client base of financial institutions and financial technology companies using our services.”