OTC Markets Newsletter - June 2013

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OTC Markets Newsletter June 2013

New Regulatory Developments Impacting our Marketplaces

SEC Considers OTCQX® and OTCQB® Marketplaces “Established Public Markets”

On May 16, the SEC updated its Compliance and Disclosure Interpretations stating that the OTCQX and OTCQB marketplaces are now considered “established public markets” for the purposes of establishing a public market price when registering securities for resale in equity line financings on SEC Forms S-1 or S-3. As a result, companies may use their OTCQX or OTCQB marketplace trading to complete an equity line financing registration statement, and no longer need to have a quote on FINRA's OTC Bulletin Board to be considered having an established public market.

The SEC’s decision comes after a decade of changes and improvements in technology, transparency and regulation in the OTCQX and OTCQB marketplaces, and marks an important development for SEC reporting companies. These companies may now rely on the depth and breadth of broker-dealers quoting and trading on the OTCQX and OTCQB marketplaces to establish a public market price when raising capital.

To view the SEC’s May 16 Compliance and Disclosure Interpretation Question 139.13 updating its “established public market” policy, click here.

Companies with questions regarding this SEC policy change should contact our Issuer Services division at (212) 896-4420 or issuers@otcmarkets.com. Broker-dealer subscribers with questions should contact OTC Link Trading Services at (212) 896-4420 or link@otcmarkets.com.

OTC Markets Group Requests SEC to Expand Form 13(f) Reporting Requirements to Include all OTC Equity Securities

OTC Markets Group has submitted a comment letter to the SEC requesting that the Commission expand the scope of Form 13(f) reporting requirements to include all equity securities traded on the OTCQX, OTCQB and OTC Pink marketplaces.

Under Section 13(f) of the Securities Exchange Act, institutional investment managers with over $100 million under management are required to file a quarterly report of their equity holdings in all exchange-listed securities, but there is no such reporting requirement for securities trading off a national securities exchange. As a result, there are over 9,400 companies that are unable to accurately determine which institutions hold their securities, with no available recourse. That includes over 2,500 foreign companies whose ADRs and foreign ordinary shares trade exclusively on the OTCQX, OTCQB and OTC Pink marketplaces, approximately 700 community banks, 3,800 SEC reporting companies and thousands of smaller U.S. companies.

As we stated in our SEC comment letter, “When Congress mandated quarterly reporting under Section 13(f), it noted its intent to ‘create... a central repository of historical and current data about the investment activities of institutional investment managers, in order to improve the body of factual data available and to facilitate consideration of the influence and impact of institutional investment managers on the securities markets and public policy implications of that influence.’ Including securities traded on the OTCQX, OTCQB and OTC Pink marketplaces in 13(f) reporting would shed light on the activities of institutional investment managers working with these securities and support the Congressional intent behind the rule.”

To read our April 30 SEC comment letter, click here. Please read the recent Barron’s article covering our comment letter on 13(f).


Get to Know Your Community:
Keith Murphy, Chairman and CEO, Organovo Holdings Inc.

Organovo Holdings Inc. (OTCQX: ONVO), the designer and creator of functional, three-dimensional human tissues, joined OTCQX on October 8, 2012. Since joining, Organovo's stock price has doubled. This month, Organovo's Chairman and CEO, Keith Murphy, sat down with us to talk about the company's technology and its various applications, becoming a publicly traded company, and its investor relations strategy.

ONVO stock chart

OTCM: Tell us about Organovo. What do you do?

KM: Organovo creates living, three-dimensional human tissue models for research and therapeutic applications. The flexibility of our bioprinting technology, which marries biology and engineering, and its proven application across a wide variety of cells, allows us to target many different tissues for development of human tissue models.  We are currently building a number of 3D tissue models for research and drug discovery applications, as well as working to fulfill our vision of building human tissues for surgical therapy and transplantation.

Click to read more.

OTCM: Creating functional human tissues using 3D technology is pretty cool stuff. What are the potential applications of this technology?

KM: To name a few:

  • 3D liver for use in drug research to prove drugs are non-toxic
  • 3D lung tissue for use to discover new drug therapies
  • Bioprinting tumor models from a patient’s own cancer cells to test different chemotherapy regimens and pick a personalized treatment regime
  • Creating patches of heart muscle for treatment of a patient after heart attack
  • Leg bypass surgery using a bioprinted blood vessel made from the patient’s own cells
The applications for this technology across research, diagnostics, and medicine are tremendously broad because the technology is the first to create fully cellular human tissues outside the body.

OTCM: Organovo qualified for the OTCQX marketplace in October last year. Why did you decide to upgrade from the OTCQB marketplace and how has trading on OTCQX helped you generate visibility with your investors and communicate your story to other stakeholders?

KM: OTCQX has been a great platform for us. As a new, young company, it gave us credibility with many investors, especially given the thorough diligence process that we went through. The fact that an investment bank puts its name on the process as having validated you is very powerful. In addition, certain investors who have restrictions from trading on other marketplaces can invest through the OTCQX marketplace – we saw significant volume uptick upon uplisting that we attribute to these investors being able to take a position!

OTCM: What was Organovo’s investor base and capital availability when you were a private company and how has that changed now that you are publicly-traded?

KM: When Organovo was private, investor relations, financing issues and raising capital took up a lot of our time. Now that we are public, investor relations, financing issues and raising capital take up a lot of our time. Our investor base is much larger and the mechanics of IR is very different. But by and large, we make certain that investors hear and understand the business plan and company story – but those investors form a much larger group now and the ways we reach them have changed. Over time, we also continue to attract more institutional investors to the company’s story.

OTCM: As a newly public company, what are the three most important things your management team has done to generate trading liquidity with investors? How satisfied are you with your trading liquidity on OTCQX?

KM: We take every opportunity to make sure we engage on multiple levels – retail and institutional road shows as well as investor conferences. We are fortunate to have a lot of PR coming our way and some great partners who attract attention to our company. The QX marketplace has certainly increased our liquidity over what it would otherwise be – and we are extremely satisfied with the trading volumes that we’ve had.

OTCM: Organovo went public via a reverse takeover, “RTO,” and Regulation D capital raise. What was that process like and why did you choose it over a traditional IPO on an exchange?

KM: For us the reverse merger was a financing event. Like any other, it’s a process that takes work and time. For us, it was cheaper and less risky than an IPO, and better on many levels than venture capital opportunities. We knew that we could do the hard work engaging investors, which is necessary at the back end of a reverse merger to increase awareness of the company. We had a partner in Adam Stern, currently of Aegis Capital and SternAegis Ventures, who had done several successful similar transactions, and we had connections to enough people to feel very comfortable with our diligence. We had the opportunity to discuss with their management teams the successful paths after reverse merger followed by companies in our space like Halozyme and Athersys.

Click to close.

View a case study about Organovo on OTCQX.

Monthly Trade Summary — May 2013

OTC Marketplace # Securities* Monthly Dollar Volume Monthly Dollar Volume
per Security
Aggregate Market Capitalization
(in Millions)*
OTCQX® 374 $2,293,347,061 $6,131,944 $1,344,092
OTCQB® 3,162 $11,435,474,866 $3,616,532 $185,377
OTC Pink® Current Information 2,683 $8,393,545,740 $3,128,418 $11,199,479
OTC Pink Limited Information 678 $150,913,552 $222,586 $10,645
OTC Pink No Information 3,130 $552,578,853 $176,543 $43,327
Totals 10,027 $22,825,860,074 $2,276,440 $12,782,920
* Selected data as of May 31, 2013.


Monthly Trade Summary — April 2013

OTC Marketplace # Securities* Monthly Dollar Volume Monthly Dollar Volume
per Security
Aggregate Market Capitalization
(in Millions)*
OTCQX® 373 $2,661,696,778 $7,135,916 $1,338,105
OTCQB® 3,196 $5,185,932,149 $1,622,632 $186,087
OTC Pink® Current Information 2,674 $6,961,121,626 $2,603,262 $11,933,886
OTC Pink Limited Information 592 $142,194,390 $240,193 $8,293
OTC Pink No Information 3,188 $556,582,955 $174,587 $43,390
Totals 10,023 $15,507,527,898 $1,547,194 $13,509,760
* Selected data as of April 30, 2013.

Events & Sponsorships

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 Annual Golf Classic (July 29, 2013)

IR Magazine Awards - Brazil (July 3, 2013)

IR Awards Europe (June 20, 2013)

IR Think Tank Europe (June 20, 2013)

SIFMA Tech Conference (June 18-19, 2013)

Marcum MicroCap Conference (May 30, 2013)

OTC Markets Group Breakfast Forum - Santa Monica & Newport Beach (May 21 & 22, 2013)

14th Annual B.Riley & Co. Investor Conference (May 20-22, 2013)



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


EDI, OTC Markets Group Partner On Corporate Actions - Waters Technology (May 29, 2013) (subscription or registration for free trial required)

Shouldn't Money Managers Have to Disclose Their Nestle and Volkswagen Stock, Too? - Barrons.com (May 24, 2013)

Wacoal the latest Japanese ADR to de-list from US exchange - Inside Investor Relations (May 15, 2013)

Going Private Confuses Bank's Shareholders - CFO.com (May 14, 2013)

OTC Markets Group Providing Delayed Level 1+ Quotes to Microsoft Corp.'s Bing Finance App on Windows 8 - press release (May 9, 2013)


Qualification Standards Strengthened for the OTCQX Marketplace

New rules for the OTCQX marketplace align the initial qualification requirements to exclude penny stocks as defined under the SEC's “Penny Stock Rule.”  The revised guidelines will allow investors to better understand the quality of companies upgrading to OTCQX. Click here for further information on the Penny Stock Rule and other recent rule changes.

OTC Markets Group and Exchange Data International Launch OTC Corporate Actions Data Service

OTC Markets Group and Exchange Data International (EDI), a premier provider of back- and front-office financial and securities data, have launched the OTC Corporate Actions Data Service to provide timely, comprehensive corporate action data for companies trading on the OTCQX, OTCQB and OTC Pink marketplaces. Click here to read more.

Market Data Updates

•   Google Finance correctly identifies companies as OTCMKTS instead of PINK.
•   Investors Hangout now incorporates the OTC Markets Group RSS feed into its platforms.
•   Fusion Trading Solutions now offers its users access to OTC Markets Level 1+ and Level 2+ (OTCQX, OTCQB, OTC Pink) Data.
•   R2G Data Services is now a distributor of OTC Markets Level 1+ and Level 2+ (OTCQX, OTCQB, OTC Pink) Data.

Regulation & Compliance

FINRA Expands Trade Halt Authority for OTC Equities

SEC approved amendments to FINRA Rule 6440, related to trading and quotation halts in OTC equity securities, went into effect May 9, 2013. More information can be found by clicking here.

OTCQX - New Additions

7 new companies joined OTCQX in May:

8 new companies joined OTCQX in April:

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

Our Marketplaces

The Best Marketplace with Qualified Companies

The Venture Stage Marketplace with U.S. Reporting Companies

OTC Pink
The Open Marketplace with Variable Reporting Companies

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.