As well stated in the longstanding NYSE Rule 202.5 on timely disclosure of material information, one of the most important and fundamental requirements of efficient markets is that public companies provide investors with adequate current disclosure and quickly release to the market any news or information which might reasonably be expected to materially affect the price for its securities. Public companies should also dispel unfounded rumors which result in unusual market activity. The provision of current and consistent public disclosure allows the market to fairly reflect the fundamental prospects of the company. Without access to good current information about companies, at best, markets can only reflect supply and demand of shares, the lowest and least efficient form of price setting.
Over the past 10 years, we have built a better OTC Markets with real-time technology to provide brokers and investors with the information they need to efficiently analyze, value and trade 10,000 OTCQX, OTCQB and Pink securities. Our data-driven market standards provide clear segmentation for investors, and incentives for public companies to be more transparent.
We have measured progress by the growth in trading in those companies that are the most engaged. Dollar volume in Pink No Information securities – a market designation that indicates that a company does not provide disclosure and should be approached with caution – has fallen from 5.2% of total dollar volume on our markets in 2014 to 0.3% year-to-date in 2016, while at the same time dollar volume traded on the OTCQX Best Market has increased from 15.1% to 19.8%.
This shift is the direct result of our efforts to bring greater transparency and information to our markets. We have made it easier for investors and brokers to identify those companies that provide fundamental investment opportunities, and better avoid the risks of opaque companies with limited disclosure through the Pink Limited and No Information market designations, as well as those companies that represent public interest concerns through the Caveat Emptor designation.
At the same time, we have established market standards that enable investor-focused companies to provide information-rich public markets in a cost effective manner. By expanding the distribution of market designations, key company information and innovative tools, like our Compliance Data File, that help streamline trading and compliance processes for broker-dealers, we are focused on helping investors make better informed decisions and enhancing capital formation.