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Banks that trade over-the-counter have long had concerns their stocks suffer from light trading and visibility. They hope a new exchange will help boost their stocks' liquidity and their buying power for acquisitions.
January 29
OTC Markets Group, an operator of financial marketplaces for 10,000 U.S. and global securities, is preparing to launch a public trading marketplace for community and regional banks, according to a company release.
The new OTCQX Banks is scheduled to launch this spring 2014. It will expand the firm's existing OTCQX marketplace to enable all banks, including banks that report to the Securities and Exchange Commission, to engage in online public trading that complies with SEC requirements.
"With over 600 community and regional banks traded on our OTCQB marketplace, we have recognized the need for a marketplace that better supports these banks' distinct place" in the heavily regulated public markets, stated Tim Ryan, vice president and managing director of OTC Markets Group, in a press release.
Currently OTC uses its Link ATS data-driven platform to connect a diverse network of securities broker-dealers and provide datasets that enable investors to assess risk. The new platform will enable banks to use OTC Link ATS to enhance their visibility with investors, depositors and the U.S. stock exchange community, and enable them to make financial reports, regulatory filings and other public information readily available to the traders and other interested parties, OTC explained in a press release. Banks will also have the option to appoint a principal "corporate broker" who will serve as their OTCQX advisor and trading liaison.
In addition, OTCQX Banks will serve as a baseline for a new community bank index for the performance of small- and mid-sized banks.
The index and the qualification process aims to provide a lower cost, easier way for these banks to get listed in the stock exchange, compared to the traditional process, Ryan said.
