An OTC markets primer – Westfair Communications

HHistorians will remember 2022 as a very turbulent year for financial markets in general, and great attention was paid to the oscilloscope giants of the New York Stock Exchange and NASDAQ, the cratering of the crypto market and the upheaval in the commodity markets. .

Somewhat neglected during this period was the Over-the-Counter (OTC) market. This sector of the financial services world rarely receives attention from the mainstream financial media, and many people choose not to pay attention to the OTC market because they have a mistaken belief in what this sector is all about.

Nicholas Coriano. Photo by Phil Hall.

“It’s either the beginning or the end for a lot of companies,” said Nicholas Coriano, managing partner of Shelton-based financial advisory Cervitude and vice president of East Coast operations at 3DX Industries Inc., which trades as OTC: DDDX. “It’s one of the smaller exchanges — it’s where companies start raising capital or if they trade on the New York Stock Exchange or NASDAQ and they don’t meet the requirements there, they enter the OTC markets.”

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Coriano noted that some people confuse the OTC market with penny stocks — he noted that “the legal definition of a penny stock is any stock under $5, so they all live in the OTC markets.” He also found that many large foreign companies prefer to have their US presence in an OTC exchange because “compensations are much lower than the New York Stock Exchange and the NASDAQ” – such as major global companies such as Volkswagen, LVMH and Nissan. Motor Co. represented the state in this sector. Also, there is more than one OTC market.

“OTC Pink Current has the least amount of financial disclosure, regulatory disclosure and filing fees for the company, so you’ll see startups in OTC Pink Current,” he said. “Some of the more established companies are in the OTC QB, and then the fully audited financials and low dollar stock prices are on the OTC QX. You can go to and they have a full list there, and they have a search feature that allows you search for companies by market, by price, by what state or country they’re in, by what sector they’re in. again – and the analysis is very similar to any other public company investment or any other stock investment.

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Compared to other stock markets, Coriano stated that the OTC markets will follow the NYSE and NASDAQ experience in 2022.

“They’ve had a tough year, and I think it’s back to 2021,” he said. “In 2021, we’ve seen a black swan event in Covid and it’s one of the few times in history that you’ll see the simultaneous printing of money and the stock going up. So, we’ve seen in all markets and the year 2021 went on a big run, and all markets sort of pulled back in 2022 – OTC didn’t really behave much differently, other than the ability to have smaller volume.

In his work with 3DX Industries, Coriano is responsible for attracting investor attention to his OTC company.

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“It’s no different than attracting an investor to another company,” he said. “You want to have strong fundamentals, a good capital structure in the sense that you’re not, you’re not offering a 10% stake in a billion-dollar company that’s doing $1. One challenge I see is that people don’t necessarily know what the OTC markets are, so explaining it to them and making them understand that it is a trading platform similar to the New York Stock Exchange and NASDAQ, will be the biggest challenge. But other than that, I think the challenge is something that private equity faces, explains the company’s value proposition in a way that makes sense.

“But one challenge I’ve had is getting people to really understand what the OTC markets are because it’s not on Fox News or on CNBC,” he added. “People just don’t have the experience or the knowledge that it is, so maybe that’s one thing that’s been a challenge.”


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