OTCQX

Categories: Trading

A solid score of 23 in Scrabble. Hey, it's not "quixotic" or "wheezily," but no one will see it coming.

OTCQX provides the highest level of the three-tier over-the-counter market overseen by the OTC Markets. It's like being in 8th grade...you've reached the top of the junior high pecking order, but you're still small potatoes compared to the folks over at the high school (high school, in this case, being the NYSE or NASDAQ).

Stocks on the OTCQX have to meet relatively high standards, at least compared to the other OTC Markets. It's open to both U.S. and international companies, but it's known as a home to some larger foreign firms.

Companies have to meet certain requirements to remain listed, like being up-to-date in their financial disclosures and showing compliance with U.S. securities law. Also, they can't be penny stocks or shell companies, or be in bankruptcy. Which, admittedly, is a bit like having to go through a metal detector to get into a party...it's nice to know someone can't get in with a gun, but if you were in a nicer neighborhood, the metal detector wouldn't be necessary.

See: OTCQB.

Related or Semi-related Video

Finance: What is Over The Counter (OTC)?3 Views

00:00

finance a la shmoop what is over the counter or OTC alright buy drugs LVM

00:10

non-prescription kind yeah those nyquil tylenol preparation-h well then you buy [Doctor filling out prescription]

00:16

them over-the-counter prescription drugs yeah those are different much more

00:20

highly inspected regulated structured and stocks work the same way when you

00:26

trade over-the-counter you're generally trading within a network of other

00:30

dealers all trading stocks think of it like everyone on Facebook had a trading [Facebook posts appear]

00:34

account nothing really is supervised door regulated or controlled it's just

00:38

the transaction happening among two strangers passing in the night [People walking around with smartphones]

00:41

exchanging glances get a fair deal on this trade well on the exchanges Amazon

00:46

was offered for fifteen hundred two dollars a share but on the OTC deck

00:51

network while it was offered at 1507 maybe you'll have overpaid five bucks a [Amazon share prices appear]

00:56

share for Amazon if you buy it here rather than on NASDAQ which is a normal

01:01

securities exchange well stocks bonds commodities derivatives they all trade

01:05

OTC and also on exchanges so why are there both methods of trading in the

01:10

first place well demand if everybody was happy with the trades they made from

01:15

9:30 to four New York time well then there wouldn't be a whole lot of demand [Stocks transferring from wall street]

01:19

for trading outside of those hours and in other places but there is so there is

01:23

an OTC trading accommodates after-hours trading as well which can be a really

01:28

big deal when a company announces earnings at 4:30 p.m. New York time and [Newspaper of record earnings for company appears]

01:32

the street either loves or hates the numbers that the companies printed the

01:36

stock can move a lot in a short period so a lot of investors are happy to be

01:40

able to either dump or scarf up positions in whatever calm at 4:32 p.m.

01:45

after the numbers have been published not wanting to wait the dozen in change [Clock rapidly ticks forward]

01:49

hours until the market opens again in the morning the basic idea behind OTC

01:53

trading is that the world of OTC is kind of the wild wild west of stock exchanges

01:58

unlike trading on the NYSE where companies have to meet very high

02:02

standards to be accepted for trading on the exchange qualify for OTC trading

02:07

while companies basically just have to spell their name properly fill out a few [Person signing a document]

02:11

forms and feel that belonging thing and even then

02:14

well you know there's a lot of flexibility

Find other enlightening terms in Shmoop Finance Genius Bar(f)