DEFINITION of 'OTCQX'
The top tier of the three marketplaces for trading over-the-counter stocks provided and operated by the OTC Markets Group. The OTCQX forum offers the best marketplace of these three tiers for companies that fulfill qualification criteria. To qualify for an OTCQX listing, a company must meet high financial standards, be current in its disclosure and be sponsored by a professional third-party advisor.
BREAKING DOWN 'OTCQX'
The OTCQX roster includes a large number of blue chips from Europe, Canada, Brazil and Russia that are global household names.
The reason for those large and prestigious companies to list on the OTCQX, rather than on a reputed exchange such as the NYSE, is mainly to avoid the high costs associated with listing shares on a large U.S. exchange. Another reason is to avoid the expenses incurred in meeting the stringent ongoing disclosure and legal requirements associated with maintaining the listing. In contrast, the application fee for international and U.S. companies that meet the OTCQX requirements is much smaller.
A U.S. company that fulfills additional requirements, such as a minimum bid price of $1 for the preceding 90 business days and meeting the financial criteria for continued listing on the Nasdaq Capital Market, would be eligible for the OTCQX U.S. Premier Tier. This tier is designed to identify large, high-quality issuers that would qualify to list on a national stock exchange. The comparable tier for overseas companies is the OTCQX International Premier, which is reserved for foreign companies that meet certain qualifications of the NYSE’s worldwide standards.
The OTCQX Marketplace provides a number of advantages to investors. It separates out the superior companies from the numerous OTC companies that are either financially challenged or are involved in questionable activities or both. It enables investors to participate in the growth of foreign blue chips. As well, investors can view real-time Level 2 quotes with detailed market data and market depth.