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OTC Markets Newsletter January 2013

Fragmentation is a Sign of Diverse Choice and Healthy Competition in our Financial Markets

A Message from Cromwell Coulson, CEO of OTC Markets Group

The past few years have witnessed a dramatic growth in the number of trading venues. Today, about one-third of trading volume in U.S.-listed securities takes place away from the exchanges on various internal broker-dealer systems, crossing networks and Alternative Trading Systems. This represents a more than 50% increase from just three years ago.

The fragmentation of trading in our financial markets mirrors a change taking place in every industry: the shift from a three-tier model of producer, distributor, retailer, to a networked community where consumers and producers connect directly through public and private networks. Apple consumers can purchase products from a retailer that is a supplied by a distributor of Apple products, a retailer that deals directly with Apple, or direct from Apple via its website or standalone stores. In a networked world, consumers connect directly with the best suppliers and no longer need an intermediary for every transaction.

The rise of networks in U.S. equity markets is allowing buyers and sellers of stocks to meet more easily. Using the Apple example, investors in Apple stock can purchase shares from brokers who place buy orders with an exchange to match them with sellers. Alternatively, brokers may use a public or private network to connect directly to other brokers who are sellers, or they can internalize the order and provide the liquidity directly to the investor without another intermediary. This networked model of trading is creating efficiencies for investors by providing buyers and sellers with a choice of trading partners and forcing intermediaries to add value or potentially be left out of the trade.

The SEC’s adoption of Regulation NMS (National Market System) in 2005 furthered this trend by enabling investors to shop around for the best supplier of liquidity and ensuring broker-dealers matched or improved the best publicly-displayed price.

As a result, today U.S. financial markets support a wide variety of business models with numerous stock exchanges, Alternative Trading Systems and broker-dealers providing liquidity and execution services to meet the unique needs of different types of institutional and retail investors. With a choice of different types of execution and liquidity providers, investors and brokers can select the destination that offers them the best liquidity and lowest total execution cost. Market fragmentation has improved the overall efficiency of trading and pricing of securities in the market.

At OTC Markets Group, we take pride in the Open, Transparent and Connected platform we have developed to unite the fragmented world of OTC market participants. Our OTC Link® ATS directly connects a diverse community of broker-dealers providing liquidity and execution services across a seamless network. Today, the world’s leading electronic broker-dealers use our technology to display prices, attract orders and conduct trade negotiations in 10,000 OTCQX®, OTCQB® and OTC Pink® securities.

By helping broker-dealers better connect with their trading partners and providing tools for companies to inform their investors wherever they analyze, value and trade securities, we can leverage the power of networks to create better informed and more efficient financial markets.

For more information, please contact us at info@otcmarkets.com or visit our website at www.otcmarkets.com.

Get to Know Your Community:
Brad Colby, President & CEO, American Eagle Energy Corporation

This month, Brad Colby, President and CEO of OTCQX company, American Eagle Energy Corporation, speaks to us about the company’s dedication to the development of energy resources in North America. Since joining OTCQX in July 2012, the company’s valuation has nearly doubled.

Mr. Colby, tell us a little about American Eagle Energy Corporation.
We produce crude oil and natural gas, predominantly in the Bakken and Three Forks formations in Divide County, North Dakota.  We refer to that area as our Spyglass Property.  In some of the Spyglass Property wells, we are the operator, which means that we are responsible for the drilling and completion of the wells and, thereafter, for the production from the wells.  In other wells, we have a working interest with other companies such as SM Energy Company and Samson Resources, among others, serving as the operators.
 
Two things make American Eagle Energy unique: the strength of our management team and our specialization in exploiting unconventional oil plays.  Our company consists of industry leaders with strong ties in different sectors, allowing us to build a network to locate and develop new projects very efficiently.
 
In 2012, we drilled and completed eight company-operated wells, with average initial production rates ranging from 450 to 600 barrels of oil per day.  Additionally, we participated in 36 other wells in the Spyglass Property area, all of which are currently producing.
 
What should investors expect to see in 2013? What is your growth strategy for this year?
The objective of American Eagle Energy’s 2013 operated drilling program is to complete 15 to 18 gross wells (5 - 7 net wells) in the Spyglass and West Spyglass Project areas.  In addition, we plan to continue our leasing program with the primary objective of consolidating our interests near existing leasehold positions and targeting highly selective areas for further development.
 
We are extremely pleased with the progress that we made on our Spyglass Property this past year and our ability to meet or exceed our projected growth targets throughout the year.  As 2012 ended, we acquired additional working interests in several key non-operated spacing units in the Spyglass Property area.
 
To read the full interview, click here.

OTC Events

OTC Markets Group has attended or will attend the following events to educate investors, broker-dealers, and OTCQX, OTCQB and OTC Pink companies about our marketplaces.

STANY’s 22nd Annual International Conference & Cocktail Reception (Jan. 10, 2013)

STA Chicago 87th Annual Mid-Winter Meeting (Jan. 24-26, 2013)

Bank Director’s Acquire or Be Acquired Conference (Jan. 27-29, 2013)

Bucknell University Internship & Job Fair (Jan. 29, 2013)

IR Magazine Awards – Canada (Feb. 6, 2013)

35TH Annual Conference on Securities Regulation and Business Law (Feb. 7-8, 2013)

25th Annual ROTH Conference (Mar. 17-20, 2013)

Contact us if you are interested in meeting us at one of these events.

OTC Markets News

OTC Markets Group CEO: Dividend Tax Unfair Even Before 'Cliff' - CNBC (Dec. 27, 2012)

Make Your Stocks Sarbox-Free - Forbes.com & Forbes Magazine (Jan. 2 & Jan. 21, 2013)

The Global Cost of Fiscal Indecision – Reuters (Dec. 31, 2012)

Tax Code Rewards Debt, Penalizes Dividends - Forbes.com (Dec. 7, 2012)

“I Was a Frustrated Trader” - The Motley Fool (Dec. 19, 2012)

OTC Product Updates

This Spring, OTC Markets Group will launch the OTC Service Provider Directory. The OTC Service Provider Directory is designed for companies that demonstrate expertise in 3rd party services and can benefit the 10,000 companies that trade on our OTCQX, OTCQB and OTC Pink marketplaces.

If you qualify to be a service provider, your company will be included in the annual OTC Service Provider Directory, which will be distributed to the expansive network of C-level officers, IROs, and Directors of our OTCQX, OTCQB and OTCQB companies. It will also be available on the www.otcmarkets.com  website.

A basic listing in the OTC Service Provider Directory is free of charge. Advertising in the Directory is available for a fee. To learn more about pricing, contact Allison Funkhouser at 212-896-4470 or Allison@otcmarkets.com.

To be included in the inaugural issue of the OTC Service Provider Directory, complete the Service Provider Update Form available by clicking here.

Market Data Updates

• After the merger of TradeKing and Zecco, OTC Markets Real-Time Level 1 prices will be available to TradeKing customers.

• OTC Markets Group’s delayed inside prices are now available on StockSmart (stocksmart.com), a market research and analytics Web site.

• The OTC Markets RSS Feed which includes unique OTCQX, OTCQB and OTC Pink company news and financial reports distributed by the OTC Disclosure & News Service, is now available via ADVFN, Factset, and Trackdata.

2012 Year-End Summary

OTC Marketplace # Securities* Total 2012 Dollar Volume by Marketplace Total 2012 Dollar Volume per Security Aggregate Market Capitalization
(in Millions)*
OTCQX® 400 $22,944,077,658 $57,360,194 $1,298,150
OTCQB® 3,401 $31,473,130,100 $9,254,081 $185,910
OTC Pink® Current Information 2,499 $74,373,618,933 $29,761,352 $10,160,632
OTC Pink Limited Information 609 $3,802,790,602 $6,244,320 $8,500
OTC Pink No Information 3,065 $3,028,535,649 $988,103 $26,498
Totals 9,974 $135,622,152,942
$13,597,569 $11,679,689
* Selected data as of December 31, 2012.

 

Monthly Trade Summary - January 2013

OTC Marketplace # Securities* Monthly Dollar Volume Monthly Dollar Volume
per Security
Aggregate Market Capitalization
(in Millions)*
OTCQX® 400 $1,800,326,936 $4,500,817 $1,298,150
OTCQB® 3,401 $2,164,658,537 $636,477 $185,910
OTC Pink® Current Information 2,499 $6,218,846,804 $2,488,534 $10,160,632
OTC Pink Limited Information 609 $139,217,167 $228,600 $8,500
OTC Pink No Information 3,065 $155,050,374 $50,587 $26,498
Totals 9,974 $10,478,099,819
$1,050,541 $11,679,689
* Selected data as of December 31, 2012.

OTCQX - New Additions

9 companies joined OTCQX in December, 2012.

A complete list of OTCQX companies is available on www.otcqx.com.

Our Marketplaces

OTCQX
The intelligent marketplace for the best OTC companies with the highest financial standards and superior information availability.

OTCQB
The venture marketplace for companies that are current in their reporting with a U.S. regulator.

OTC Pink
The open marketplace for a wide spectrum of equity securities.

For questions, please contact OTC Markets Group.
www.otcmarkets.com • 212 896 4420 • info@otcmarkets.com

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© 2013 OTC Markets Group Inc.